You need a good credit score if you want to own a house. The rationale for getting a good score is that you are aiming for the best credit limits and rates while applying for loans. Even though a high credit score will help you get the best rates, there is no need to reach the highest rating. All you need is a ‘good’ credit score.
The FICO scale states that the best attainable credit score is 850. However, the score is difficult to get. To attain the score, you must have the perfect blend of spotless credit history, credit utilization and zero negative marks on credit report ? which is not practical.
A more realistic credit score is 760. According to FICO, a score above 760 does not make much difference. So aim to get a credit score of 760.
How to get a realistic good credit score
- Keep paying your bills on time:?It is important to keep your credit report spotless, once you decide to take a loan. Pay your bills before or on the due date. Ensure that you do not cross your credit card limits. Keep your credit card balances low. Among the best ways to increase your score is to keep your finances clean and sorted. A majority of businesses utilize cutoff parameters when they determine your credit or rate limit and it is important to be above the ceiling.
- Do not cancel any credit cards you currently use:?It may appear counter intuitive, but when you cancel a credit card, you actually push down your credit score. A portion of your credit score is dependent on the amount of credit utilization. It follows that higher credit scores correspond to greater availability of credit. Even if you have paid off your credit balance on the cards, keep them open and collect extra points from having an additional line of credit.
- Communicate with the credit card lenders:?In case your credit score is low due to credit card debt, talk with credit card lenders and try to pay off the debt. A majority of lenders will happily co-operate with you, as they want their money back. Remember that in the event of a deal, ask your lenders about how they will report it to credit bureaus. They have two choices: ‘Paying as agreed’ and ‘Not paying as agreed’. The second is harmful and pushes your score down. Ensure they report your activity in the ‘Paying as agreed’ option prior to agreeing to the deal. If you are not confident about doing it on your own, sign up for a credit repair service.
- Get secured credit card:?In case your bad credit rating keeps you for getting a loan or a credit card, try to sign up for secured credit card. In such a scenario, you place a deposit to get a secured credit card. It is immaterial how bad your credit rating is, in such cases. Ensure that the card you have applied for reports to the three credit bureaus – Equifax, TransUnion and Experian. If not, the credit score will not be affected by the additional line of credit.
- Ensure your credit report is error-free:?Millions of people have errors in their credit reports. Many of them have errors affecting their credit score. Regularly check your credit report and ensure that there are no mistakes. You can increase your score by just fixing a few mistakes.
You should maintain a good credit score to take advantage of the best credit rates. It is not hard to maintain an excellent score if you keep paying on or before the due date and communicate with credit card lenders for paying off your debt.
Try reading out credit repair company reviews and see what credit repair company might help you the most effectively.