Ways To Build Up Your Credit Rating

Having a good credit score offers numerous benefits. In general those with the highest credit scores have access to a number of perks that may include lower interest rates, lower fees

New York, NY (prHWY.com) June 22, 2012 - Homestead Funding discusses 5 ways to build a better credit score.

Having a good credit score offers numerous benefits. In general those with the highest credit scores have access to a number of perks that may include lower interest rates, lower fees, lower down payments and better terms on all types of loans including home mortgages and refinances. You can earn a high score if you follow some tried and true methods of promptness, self-discipline, paying attention and frugality when needed.

Credit scoring agencies such as FICO use a complex mathematical calculation to determine your personal number. The exact formula is a trade secret, but each of the following steps will edge you a bit closer to the top. If you go for all five, you will put yourself on a direct route to an excellent credit rating in no time.

Step one: make all your payments every single month. This may seem obvious to you, but a surprising number of people think that one or two missed payments will not do much damage as long as they make up for it the following month. Not so. Even one or two missed payments a year on your mortgage, car loan or credit cards can keep you out of the inner circle of high scores. Make it a priority to pay at least your minimum payment every month.

Step two: pay on time. Some people may think that consistency is the most important thing, and that as long as they make payments every month, it's OK to be late now and then. They are wrong. Consistency and promptness together make up the foundation for improving credit scores. Without the foundation, you have nothing upon which to build your improved credit. Pay on time, and pay every time.

Step three: use no more than one third of your available credit on the combined total of your credit cards. That means if you have a total amount of $15,000 in credit among three different cards, you should carry a combined monthly balance of no more than $5,000.

Also keep in mind that while it is tempting to use just one card - especially if it gives you points for making purchases - and ignore the others, this is not the wisest strategy. It is best to spread your debt among several cards so that no one card balance creeps too closely to its credit limit. Try to use no more than half the credit limit of any individual card.

Step four: avoid closing any open accounts. Let's say you have eight credit cards and you feel that's too many to keep track of. You want to close four and keep four open, which is more manageable. Don't do it. Your credit rating will take an immediate beating.

It is much better for your credit score to not use a card than to close it deliberately. If you especially dislike one card because it has a yearly fee or you don't like the customer service, you can close that one card, but don't close any more for a while. Again, see Step 3. The more available credit you have that you don't use, the better your score will be.

Step five: be vigilant. Check your credit report regularly. If any bad credit marks stay on your report after the seven-year limit for reporting them, you need to write to all three major credit reporting agencies to tell them. Also check for mistakes and any signs of possible identity theft.

A good credit rating is not only something to be proud of... it can also save you real money and make life easier. You can join the club of people with high credit scores as long as you follow these five simple steps. Of course "simple" doesn't mean "easy" but like anything else, you will get better with practice.

Need more information about improving your credit score? Speak with a Licensed Loan Originator at Homestead Funding today. The mortgage specialists at Homestead Funding can assist borrowers looking for all types of residential financing. Whether you are a first time home buyer or refinancing your current home, Homestead Funding can assist you. For a complete list of Homestead Funding's products visit the Mortgage Products page here. Homestead Funding's specialists are located throughout New York State, Connecticut, Massachusetts, Pennsylvania, Virginia and Maryland. To speak with a mortgage specialist near you, visit http://www.homesteadfunding.com/locations/search.cfm.

Homestead Funding Corp. is a multi-state licensed mortgage banker with branches located in New York State, Connecticut, Massachusetts, Pennsylvania, Virginia and Maryland. In operation since 1995, our corporate headquarters is located in Albany, New York where we have perennially been the area's largest independent mortgage lender. We have tens of thousands of satisfied customers, originated billions of dollars in residential mortgage loans and maintained a reputation of exceptional service, honesty, integrity and financial reliability. For more information, please visit online at www.homesteadfunding.com.


Homestead Funding
8 Airline Drive
Albany, NY 12205
(518) 464-1100
www.homesteadfunding.com

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Tag Words: home mortgage loans, fha loan

Categories: Real Estate

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Homestead Funding
8 Airline Drive
Albany, NY 12205
(518) 464-1100
www.homesteadfunding.com

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