Buying a home is a huge step forward in life for so many. Did you know that as little as one credit score point could mean a better interest rate or even the difference between approval and denial? It’s true! In today’s lending world, a credit score is probably the first thing that every lender reviews. When buying a home, you want to have as high of a score as possible. This is true even if you are going from a 639 to 640. To improve your credit score, here are three quick, valuable credit tips to help:

Credit Tip #1 – Pay Down Revolving Debt
First of all, a credit score is comprised of several factors (in order of importance): payment history, balance compared to limits on revolving accounts, length of credit history, type of credit, and new confidence. Also, keep in mind that mortgage credit scores usually differ from free credit scores. The first tip deals with the quickest way to gain points, and that is to pay down revolving debt. Revolving debt includes credit cards and lines of credit. The lower the balance is compared to the credit limit as a percentage, the higher the score. Therefore, a $100 balance on a $500 limit will score much better than a $450 balance on the same card. 20% of the limit compared to 90% could make a huge difference in scores.

Credit Tip #2 – Revive Old Cards
The next trick is to bring an old, but open credit card back to life. What’s that mean? Let’s say you have a department store or Visa card that you haven’t used for years, but it is still open. If you have limited recent credit, you could charge $10 – $20 on the old card which would now provide you with recent credit activity with a very low balance compared to the limit. Remember tip #1! This little-known tip can make a quick difference.

Credit Tips #3 – Increase Credit
Finally, the 3rd tip is to request a credit line increase. Again, remember tip #1? Well, what if you can’t pay down your credit card balances quickly so that you can increase your scores? Then, contact your credit card company and request a credit line increase. An increase of limit will reduce your percentage owed! For instance, if you owe $4,500 on a $5,000 limit, you are at 90%. That will hurt credit scores, but if the limit is raised to $10,000, you are now at 45% of the limit. This could make for a significant credit score increase, and you haven’t spent a dime.

Keep in mind that there are so many other credit improvement opportunities as well as traps. Plus, each person’s credit scenario is different. Reach out to an OVM Financial Loan Officer to discuss your credit and let’s develop a plan custom made for your best home buying experience. Although in credit scoring, you have a number, we will not treat you like a number!