5 Tips To Improve Your Credit Score

Improving your credit score in Williamsport is imperative if you intend to make major purchases such as a house or car in the foreseeable future. There are several options that you can use to improve your credit score. The most important thing to remember is that you do not need to live above your means. This has been some of the most valuable advice given to people who want to build their wealth. 

The first thing you need to do to improve your credit is to make sure you pay all of your bills on time. Each bill that is in your name can positively or negatively impact your credit.  

Just missing one payment, you can lower your score by several points. One of the worst things you can do is to make a late payment and begin accruing extra fees. Most credit card companies have high interest rates after the first year. It is not unheard of to pay over 20% interest after a late payment. You may be wondering how you can pay all your bills on time. It is easy to feel overwhelmed, especially if you are spending more than you are making each month.  

The next option was touched on a little in #1. In order to improve your credit score, you need to improve your DTI ratio. DTI stands for debt to income ratio. The simplest way to explain this is to spend less than you make. When you overspend, aside from the fact you are not putting money into a savings or emergency account, you are also very likely not properly separating your needs versus your wants. While most of us would hate to lose the things we like, they are not crucial to our survival. You need to calculate how much you make each month and then subtract the bills you pay. From there, you can separate the amount you spend eating out, your phone plan and other extra sources of entertainment. Once you add up your extra expenditures, you can easily find ways to save money. 

Shane Whitteker is the owner and chief broker at Williamsport mortgage broker Principle Home Mortgage. He helps his clients work through credit issues so they can get a great mortgage.

“Managing debt requires discipline,” Whitteker says. “If you are the type of person that will put whatever you want on credit, you probably will have DTI issues when trying to purchase a home. Self-control is really the biggest aspect of debt management in my opinion.” 

Some people are curious as to how many lines of credit are too many to have open. Usually, if you have one credit card that you can use for secure purchases and the perks it offers, you should be fine. Many stores will offer a percentage off your total purchases if you open up a new credit card. While the offer seems enticing at first, be aware that opening up too many lines of credit can hurt you. Any time a business makes an inquiry on your credit score to see if you qualify for their credit card, your score my go down depending on how many recent credit inquiries you have had. If you have a significant negative impact on your credit, this can take months to recover from. 

Many people have negatively impacted their credit scores by opening up multiple credit cards and becoming overwhelmed with the payments or seeing it as free money that does not need to be paid back right away. In general, you should strive to keep your credit card usage under 10% of your total spending. This amount is not unreasonable and is manageable.  

There are a lot of people who are adamant about no credit card usage whatsoever. You do not have to be afraid to use one, rather just be responsible with it. An important fact about credit cards is that when a line of credit is unused for a certain amount of time, the account will be closed and your credit score actually goes down. It is also another reason why you do not need to apply for every line of credit that is offered to you. It is a good idea to consolidate your lines of credit so that you can make manageable payments and help to repair a damaged credit score. 

Another easy tip to improve your credit score is that if you open up a few lines of credit, you should try to keep them open. This is not to contradict the previous tip, but if you've already gotten multiple credit lines open in your name, as long as you make your payments, you can build your credit history. The length of your credit history is important. For someone who has never had anything in their name, it would be difficult to finance a car, even if their credit score was decent. That is due to the fact that there is no credit history in which to gauge if this person will default on a loan. For a business or bank to take a chance on someone with a short credit history, they are putting themselves in jeopardy. If you do have multiple cards, as long as you make a purchase every few months - and keep up with your payments, your credit score will not suffer.  

The final tip to improving your credit score is pretty simple. If your credit score has incorrect information on it, you do need to take steps to get it fixed. There are several credit score companies that specialize in helping you to find out what your credit score is and how to improve it. By contacting them, you can get your information fixed and you can easily keep track of the things you need to do to improve your score. 

To learn more about how you can improve your score, contact Williamsport mortgage experts at Principle Home Mortgage today at (814) 308-0959.