If you have already moved to the US or are about to, you know how important a credit score is because credit score = trust here. Especially the trust of creditors! When considering getting a mortgage for your home, your credit score is the primary factor that lenders consider. We’ve compiled a list of suggestions to help you improve your credit score for better comprehension.
Tips to fix my credit score
1. Set up auto payments
To avoid delays in payments and not live from reminder to reminder that you need to pay some bill again (and there are many of them), we advise you to enable auto payments. Also, ensure that the account you linked the auto payment to has enough funds to avoid an overdraft.
2. Pay off your debts
If debts still accumulate — do not panic! The best strategy is to pay them off gradually: from the smallest to the largest. One way to determine financial stability in the US is to look at how much of your available credit limit you are utilizing, also known as your disposal of funds percentage. Different estimates suggest that the available funds should not be surpassed by more than 30%. If a resident of the United States spends entirely on their credit card, they will face a decrease in credit score. Therefore, pay off credit card debts so the debt is as low as 30%. Or better yet, not to have it at all.
3. Dispute Credit Reports If They’re Incorrect
You can receive a credit report from one of the three operating credit bureaus. By the way, the data in the reports from different credit bureaus may vary. Study them. If the announcements contain incorrect information (number of loan requests, refusals, lines of credit, debts, etc.), challenge them. Your score will only go up.
4. Boost your credit score
Along with the traditional means of improving the score (timely payments, multiple lines of credit, disposal, age of credit history, etc.), some can improve it even more. Open a secured credit card or become an authorized user of a highly rated relative’s credit card. Another way is to register Experian Boost, where you can connect to telephone, utility, and other payments, contributing to the score’s growth. On average, users of this service increase their credit score by 13 points.
5. Don’t close old credit cards
New immigrants especially need to know this. One of the most important indicators that affect the credit score is the age of the credit history. This age starts with the first credit card. If you close the oldest credit card, then the period of the credit history will be reduced to the moment you opened the second credit card. And most importantly, your credit score will decrease. Therefore, the first credit card must be groomed and cherished.
6. Request New Lines of Credit Wisely
If you want to open a new credit card and your bank has turned you down, consider why your application was rejected before contacting other banks. If scoring algorithms notice that you are applying for the same type of loan (credit card, car, etc.), then it concludes that you need money, which means you are not very financially competent. As a result — failures and lower scores.
7. Protect your personal information to avoid scams
Identity theft can affect your credit if scammers access your personal information to open accounts in your name (social security number, address, driver’s license, etc.). To ensure the security of your data, it is recommended to utilize a password manager to generate and securely store unique passwords. Additionally, it is advisable to refrain from conducting any financial transactions on public Wi-Fi networks, as they are prone to being compromised by hackers.
8. Manage your budget
The beginning of the year is the best time to plan your budget so you know how much you can spend and how much you need to save. You can keep a regular table in Excel or Google Docs or download an application to monitor your spending. In any case, there are many options.
9. Avoid credit repair services
In other words, these organizations promise to fix your credit history by removing factors that negatively affect the history itself and your credit score. But the truth is that no company can legally erase information from your file if it is correct. Refrain from spending money on repairing your credit history. Instead, take proven measures to improve your situation.
10. Have patience
Improving your credit score and history is a long process. An excellent credit score is most often the result of years of conscious financial behavior. Some strategies will allow you to see minor improvements quickly, but it will take time to join the ranks of people with the highest credit scores. All at once — this is not about loans in the United States.
It is doubly difficult for immigrants. Those born in the USA or who have lived here since childhood can start a credit history at 16 while having all the necessary knowledge and a certain level of financial literacy learning in the family and at school. Immigrants, on the other hand, have to start all over again from the age when they arrive in the United States. But the rules are the same for both: pay on time, control your credit score, and be patient.
As complex as the US credit system is, it is fair. Those who can be called financially literate and competent have more favorable conditions: low-interest rates on loans, travel privileges (business class on airplanes at an economy price, better hotel rooms, insurance, car rental), etc. Have a credit history in the USA and a good score — profitable. If someone does not agree with this, these people probably do not understand what is at stake. In any case, if you want to connect your life with the USA, there is only one way with credit of trust.
Tips to fix my credit score. Conclusion
Plan your budget, set up auto payments, and pay off your debts — there are a lot of tips to improve your credit score! To secure the best mortgage terms, follow these steps. For more information, sign up for a consultation at LBC Mortgage. We help find the best solutions that tailor to your financial needs.