3 Ways to Improve Your Credit Score
Originally posted April 2013… I’m happy to report that by the time our house was finished (man, that took forever), and our financing went through, my score was high enough to qualify us for a great interest rate! It was nice having Credit Sesame keep me plugged into what our credit score was and help me stay focused on improving our credit! I decided to repost it so that all of you can improve your credit and achieve your goals!
Want to Know How to Raise Your Credit Score?
I wanted to know too! Over the past 6 months I’ve been researching the best ways to raise my credit score. 4 years ago my husband lost his job. Thank goodness I started to listen to and follow the steps Dave Ramsey recommends. Instead of spending our tax refund like we always had in the past, we saved it. Just a few weeks after I tucked the money safely away in our savings account, my husband was laid off. At that time I was expecting baby #7 (surprise!). Needless to say, the next 18 months were rough.
You can read more than you ever wanted to know about me and my family’s situation in this New York Times Magazine article that Monica and I were featured in last year. But needless to say, after the first 18 months into unemployment, our credit was shot. In fact, we nearly lost our home. If it weren’t for some wonderful friends, and the blessing of this blog (you know that this blog is free for you to use, but we still make an income from it), we were able to keep our home.
Fast forward to NOW! We have a stable income again, in fact, we’ve paid off all the remaining credit card debt, and we’ve been able to start saving! But our credit scores were still lower than they used to be. You can imagine that we’re busting at the seams as my family of 9 is starting to grow (not in numbers, but in size… these kids are getting bigger and inviting friends over!). We’ve been needing to move into something a little more spacious for some time.
Want to know what I’ve learned? (disclosure: I’m no financial expert, I’m just sharing what worked for me these past few months)
3 Easy Ways to Raise Your Credit Score
1 – Raise Awareness
Last fall I signed up for Credit Sesame. I love it! Not only do I get to see my credit score for FREE every single month, Credit Sesame also offers a FREE credit monitoring service. It’s a great way to keep an eye on your financial situation… I especially love their app! Right at my finger tips I can get a quick snapshot of how things are going for us (as you can see in the screenshot I took of the app on my phone —>).
- 100% free personal finance credit and debt management tool
- no credit card required or trial period (LOVE this!)
- gives an instant view of your credit, including Experian credit score
- refreshes monthly & for free
- provides debt analysis with personalized offers tailored to your credit profile
I use Credit Sesame and recommend it to anyone who wants to be aware of and improve their financial situation!
2 – Keep a Low But Active Credit Card Balance
My loan officer told me one of the fastest ways to raise your credit score is to use a credit card each month… keep it active. So I have an Old Navy credit card (because I love to save an additional 10% every Tuesday). My limit is just $500… he told me to put about $50-$75 on my card each month (he told me to SHOP at Old Navy… OK!). I pay it off before any interest accrues, but for a few months prior to taking out a loan for our new home, actively using and paying off this card would help. The biggest spread you have between your balance and your line of credit, the better. So if you have a card with a $5000 credit limit, using about $500 of that each month (and paying it off) will help your credit score.
If you don’t have a credit card, you should have one. We have a list of the best rewards credit cards (you might as well earn some rewards for using credit!).
3 – Pull Your Free Credit Report
You are entitled to 1 free credit report every 12 months from each of the 3 national consumer reporting companies-Experian, Equifax, and TransUnion! It is important to check your credit report regularly for accuracy and signs of fraudulent activity. You can get that yearly from AnnualCreditReport.com. You can either pull all three reports once a year (do it on your birthday to help you remember), OR every four months pull just one of the credit reports from one of the credit bureaus (do it in January, May, and September… those are months that the kids are either returning to or finishing up school).
In the last three months my credit score has gone up 30 points, just by doing these few small things. Now, by all means, I’m no financial advisor… I’m just sharing what worked for me. Talk to your lender about specific ways you can raise your credit score, based on your situation.
The higher your credit score, the better interest rates you can get on a home loan. With the real estate market picking up, we decided now was a great time to move into a new home.
What other things have you done to improve your credit score?
Disclosure: This post contains affiliate links, but I shared this info with you because of how pleased I was with the service and how I like to use tools to become informed and make financial decisions that work for me. I am not a financial adviser nor claim to be one. Feel free to consult with yours first. These are my honest opinions and my story.