Credit Score Online

By Candence Bank

Are you thinking about buying a home? Given the importance of your credit score in the mortgage loan application process, it’s smart to take steps to boost your score before applying for a home loan. Here are five strategies that can help improve your credit score:

1. Pay bills on time.

Timely payment of bills is one of the biggest factors in the computation of your credit score. According to CreditKarma.com,this single factor may account for 35 percent of your overall score. So, one of the best ways to build and maintain solid credit is to consistently pay your bills on time.

2. Limit the number of credit cards you use.

Carrying balances on a number of different credit cards tends to damage your credit score. Therefore, it may be wise to pay off some of these balances as soon as you can and use just one or two credit cards going forward.

3. Don’t necessarily close old credit accounts.

One common misconception about credit scores is that old accounts should be closed and removed from the credit report once balances have been paid in full. This is not necessarily so. If you made payments on the account in a timely manner, this will help your credit score. In addition, closing a card that you have had for a long time can also shorten your credit history, which could affect your credit score.

4. Manage your debt-to-credit ratio.

This is the percentage of credit that’s available to you that you’re actually using. For example, if your credit limit on a card is $10,000 and you currently have an outstanding balance of $5,000, your debt-to-credit ratio would be 50 percent. Ideally, you should try to keep your debt-to-credit ratio at 30 percent or lower.

5. Be consistent in your use of credit.

Try not to do anything out of the ordinary from a credit perspective during the months leading up to your mortgage application. This could raise a red flag and possibly indicate additional credit risk.

Visit Cadence Bank at www.cadencehomeloans.com to speak with one of our mortgage advisors. 

Cadence Bank, N.A. Member FDIC Equal Housing Lender NMLS#525022

This article originally appeared in the Defender News Service.

Cadence Bank tips to improve your credit score to buy a house

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