(850) 842-2200
How to improve your credit score in 6 steps

Do you want to buy a house or a condo but your credit score is holding you back? Sandpiper Cove Realty has the answer. We’ve put together a guide on how to increase your credit score that will help you get back on track. Follow our simple tips and watch your credit score improve in no time!

1. Make On-time Payments

One of the most important factors in your credit score is your payment history. Lenders want to see that you have a track record of making on-time payments, as this is a good indicator of whether or not you will be able to handle future credit responsibly. late payments are often reported to the credit bureaus, which can damage your credit score.

Fortunately, there are steps you can take to avoid this. Setting up autopay for your bills ensures that you will never miss a payment, and bill pay reminders can help you keep track of when each bill is due. These simple steps can help protect your credit score and show lenders that you are a responsible borrower.

Credit tip: 100% on-time will earn you an excellent score.

2. Age Of Credit

Your credit history is one of the most important factors that lenders consider when evaluating your creditworthiness. This is because your credit history records your past credit management activities, allowing lenders to assess your risk level.

One of the key components of your credit history is the age of your oldest credit account. The longer you have been managing credit, the more experience you have and the lower your risk level. As a result, it is generally advisable to keep your oldest credit account open and in good standing. This will help to build a positive credit history and improve your chances of qualifying for favorable loan terms.

Credit tip: 25+ Years of credit will earn you an excellent score.

3. Using Your Credit Wisely

Your credit utilization is the amount of credit you’re using compared to the amount of credit you have available. For example, if you have a credit limit of $1,000 and you often carry a balance of $300, your credit utilization would be 30%. Lenders typically like to see a credit utilization ratio below 30%, but the lower, the better. That’s because it shows that you’re using a healthy amount of credit and are likely managing it responsibly.

On the other hand, if your credit utilization ratio is high, lenders may view it as a red flag that you’re over-indebted and may have difficulty repaying what you owe. To keep your credit utilization in check, aim to use no more than 30% of your available credit at any given time. By doing so, you’ll not only avoid damaging your credit score but also improve your chances of being approved for new lines of credit in the future.

Credit tip: Using 0-10% of your credit will earn you an excellent score.

4. Reduce Recent Inquiries

Recent inquiries can stay on your credit report for up to two years, and can negatively impact your score for up to 12 months. Even if you’re just shopping around for a new credit card or loan, each inquiry will be recorded on your report. Too many inquiries in a short period can signify to lenders that you’re financially overextended and could make it harder to get approved for new credit accounts.

So when you’re considering applying for new credit, it’s important to weigh the potential benefits against the potential damage to your credit score. Apply for credit only when you need it, and try to keep your inquiries within a short time frame to minimize the impact on your score.

Credit tip: 0 inquiries in the last 2 years will earn you an excellent score. 1-2 will earn you a good score.

5. Opening New Accounts

One thing to keep in mind is that lenders often look at how many new accounts you’ve opened in a short period when considering a new loan or line of credit. If you’ve opened several new accounts in a short window of time, it might give the impression that you’re overextended and not able to manage your finances responsibly.

So, it’s important to only apply for credit when you need it and to manage your accounts responsibly once they’re open. That means paying your bill on time each month and using only as much credit as you need. By following these simple tips, you can avoid giving lenders the wrong impression and keep your financial options open.

Credit tip: 0-2 new accounts in the last 2 years will earn you an excellent score.

6 Your Available Credit

Available credit is the maximum amount of credit that a lender will extend to a borrower. Available credit is essential because it is one factor that lenders consider when making lending decisions. If you don’t have enough available credit, a lender might see this as a sign that you’re stretched too thin financially and might not be able to pay them back. This is why it’s essential to keep your available credit at a reasonable level.

Using less than 30% of your available credit is a good goal. But, keep in mind that using some available credit and paying it off monthly may be better than not using any credit at all. Available credit is just one factor that lenders consider when making lending decisions, but it’s an important one. So make sure you manage your available credit wisely.

Credit tip: Having access to $50k+ of total available credit will earn you an excellent score.

If you’re looking to purchase a condo or home shortly, it’s important that you start taking steps now to improve your credit score. By following the tips we’ve outlined in this blog post, you can work towards having a strong credit history that will make you eligible for better interest rates and terms when it comes time to buy. So what are you waiting for? Get started improving your credit rating today!

Do you want to speak with a lender regarding your next steps? Click here to go to our lender page.

Find your credit score here.