Most negative items on your Credit Report stay for as long as seven years. One bad decision that takes a second to make, will affect your credit rating for the next 7 years. Having a high credit score will allow you to get better terms from your lenders. Let me elaborate, better terms mean lower interest rates, no signup fees, no security deposits. It means more money in your pocket.
$200K mortgage will cost you over $100 per month for each percentage point. So the difference between 2.5% interest on a mortgage and 7.5% interest in a mortgage is $500 every month. In addition to that with the lower credit score, you may have to pay items like Application Fee, Transfer Fee, Brokerage fees, Title insurance fees and more and more. These fees are usually waved for high credit score borrowers since most of these fees are bullshit anyway.
Are you trying to apply or renew a mortgage, thinking of leasing or financing a car? Regardless of what the reason is for you to borrow money in the near future, planning little ahead can save you tons of money. Here are 3 easy ways to improve your credit score by as much as 100 points or even more in as little as 30 days.
1. Lower Your Balances
Lowering your balances alone on your existing credit to below 30% can increase your credit score by 100 points. This is the difference of getting that car for the same monthly payment without the huge downpayment that you can apply to lower your balances. The difference between 700 points and 600 points scores can mean 3.9% interest versus 23.9% interest on a car loan or 2.5% interest and 9.5% interest on a mortgage. This is by far the quickest and best way to increase your credit score
2. Increase Your Credit Limits.
Although not the best advice, increasing your credit limits will lower your debt to credit ratio. If you don’t have enough funds to pay down your debt, this will help you increase your credit score depending on your situation. Chances are you already have a good relationship with your lenders and they will do it without a credit check. Normally I would not advise doing that just for sake of the credit rate increase but is a good strategy when you are planning to finance or refinance a major item like a house or car where you can save a huge chunk of money.
3. Dispute, Dispute, Dispute – Your Credit File
I hope by this time you already obtained your credit reports from all credit reporting agencies in your area, if not do so right away. Review your credit reports and look for discrepancies. Look for inaccurate information regardless of how insignificant it may be. File a dispute with every credit reporting agency that reports an inaccuracy, specifically if the item negatively affects your credit report. Provide additional information to support your claim and wait. In most cases, the report will be corrected within days and that will reflect your credit score immediately. In many cases simply disputing a collection account will be removed temporarily until the information you provided can be verified. Even if they remove it temporarily, the change can potentially increase your score by as much as 100 points for that period of time. Enough for you to negotiate your new credit terms for your mortgage or car loan.