How to Improve Your Credit Score

(updated 01/26/2010)

99.5% of all loan packages are credit score driven. The following will help you get, and then maintain, a high credit score.

1. Having credit cards is okay! To improve your score, only have two active credit cards with limits between $1,000-$10,000 (don’t’ keep signing up for new accounts). And, your mother was right, pay those credit cards down to zero as quickly as possible, it shows you have the ability to handle credit wisely!

2. Avoid "NO PAYMENTS for 24 MONTHS!" offers. Sounds good doesn’t it, but these type of loans may hurt your credit score as they show a debt, but no ability to pay for at least 24 months. If you do use this type of credit make sure the loan is CLOSED when the final payment is made.

3. A good rule is to keep credit inquiries to a minimum, as many credit checks over a short period-of-time will lower your score. There are a lot of offers out there for “free” credit report checks, once a year is probably sufficient.

4. Always understand the terms and conditions of any loans and make your payments in full and on time. This is especially important with home loans.

5. Be careful of credit "counseling" as this is reported to the credit bureaus. Many investors regard counseling in the same light as bankruptcies and foreclosures. It may take a minimum of two years after counseling is complete before you can get a loan package with conforming rates.