Trying to buy a house

Hi

Once all your payments are complete with your creditors, you can expect an increase in your credit scores. You can take advantage of the consolidation program to make your repayment process easier.

However, you can use the following tips to increase your credit scores considerably.
Check for incorrect entries - It is mandatory to check your credit report for any mistakes from all the three credit reporting agencies. You can review your report for at least once in a year as well as several months before you apply for a loan.

Timely payments It will be considered a very good practice if you always pay your bills on time. Your prompt payments will put you in a much comfortable position before you apply for a loan. This point is emphasized because a late or missed payment just before applying for a loan lowers the credit score and has worse impact than a missed payment five years ago.

Bring credit balance to the minimum - It is always beneficial to reduce the credit card balances as much as possible. The FICO scores get affected due to how much money you owe on some cards relative to your total credit limit. Credit scores are seen improving if the balances are kept below 25% of the credit card limit.

Don't linger your payments It is suggested not to increase the ratio by closing an account and transferring the remaining balance to another account since the ratio of the credit card balance is linked to the credit limit. Doing this will lower the credit score which should not be generally done while you are on your way to increase your credit score.

Unused accounts to be kept active - While you are applying for a loan, it is suggested not to close any unused account. At the same time, it is suggested not to open a new account also during that time. It is said because if you are having a short credit history or less number of accounts, the credit score gets lowered when a new account is opened as there is no proven track record of it.

Your credit score is evaluated by the lenders to see your financial worthiness when you are looking for a new home. Based on these credit score, loans or credit can be acquired from the creditors and other lending agencies. When the credit score is evaluated, extensive research is conducted on the following areas of your credit report.

• Your payment history is analyzed.
  
  
• The amount that you owe is taken into consideration.
  
  
• Length of your credit history is determined.
  
  
• They look out for the types of credit that you have used so far.
  
  
• They will look into your new credit.
  

I heard that it wasnt good to close out your cards even if your not using them. I appreciate all this information. It has been so confusing because I have heard so many different things. I just want to start getting on the right track again.

Yes, you are right that you should not close your card accounts even if they have not been used for a while. I have explained the reason in the post above.