Top Strategies for Improving Your Credit Score
By: Brandon Wright, CEO at Tongo
Improving your credit score is crucial for better loan terms, lower interest rates, and overall financial health. Credit scores can be a challenge for some real estate professionals, as they are juggling monthly expenses and potentially sporadic commission income. Let’s count down the top six ways to boost your credit score:
6. Keep Older Credit Accounts Open
The length of your credit history accounts for 15% of your FICO score. Closing old accounts can shorten your credit history and reduce your score. If you have old accounts in good standing, keep them open to maintain a longer credit history.
5. Avoid Opening New Credit Accounts Frequently
Each time you apply for new credit, it results in a hard inquiry on your report, which can temporarily lower your score. Moreover, opening multiple new accounts in a short period can signal financial distress to lenders. Instead, focus on maintaining and managing your existing credit responsibly.
4. Use a Mix of Credit Types
Having a variety of credit types, such as installment loans (car loans, mortgages), revolving credit (credit cards), and commission advances can positively impact your score.
3. Check Your Credit Reports for Errors
Regularly review your credit reports from the three major credit bureaus (Experian, TransUnion, and Equifax). Errors on your report, such as incorrect account information or fraudulent activity, can lower your score. Dispute any inaccuracies you find to have them corrected.
2. Reduce Your Credit Card Balances
High credit card balances relative to your credit limit can negatively impact your score. Aim to keep your credit utilization ratio below 30%. This means if you have a credit limit of $10,000, try to keep your balance below $3,000. Paying down balances is a quick way to see a score improvement.
1. Pay Your Bills on Time
Timely payments are the most critical factor in your credit score. Payment history accounts for 35% of your FICO score, so consistently paying all your bills on time can significantly improve your credit over time.
Improving your credit score is a gradual process, but by following these steps, you can make significant progress over time. Many real estate professionals have been utilizing their Tongo commission line of credit as a way to help bolster their credit scores, particularly when trying to pay monthly bills on time and reduce their credit card balances. Also, Tongo isn’t a credit product, so it doesn’t impact your credit score directly. Learn more about how Tongo can help at gettongo.com.