It was tempting to enter “cheat codes” to make it easier to beat tough levels when I played video games as kid. As the name implies, this is cheating.
The good news is that there are ways that you can boost your credit score without “cheating” or doing anything illegal. It takes a score of at least 620 to apply for most mortgages. If you’re on the edge of qualifying, here are a few simple steps you can take to make sure that you get to the highest rating possible.
A note, however: The easiest way to get into a great home is to start with great credit and keep it that way through conventional methods, such as paying your bills on time and holding a steady job. The tips below can help but they aren’t miracle workers. YOU must still commit to responsible habits and spending to get the best results!
01) Increase Your Credit Limit
This might be the most surprising of the creative tips we share with you, because standard wisdom says not to open new lines of credit in the lead-up to a home purchase. So why is increasing your limit a good idea?
Simple: It’s not the size of your credit limit that makes the difference…it’s your credit utilization ratio.
This means that the less of your available credit you use, the better your credit score. Let’s say that you pay $1,500 worth of bills every month using your card, out of a $3,000 limit. That’s 50 percent. If you increase your limit to $6,000 and pay the same bills, your utilization has lowered to 25 percent and you look better to creditors. Just make sure you’re not tempted to spend more because of your higher limit!
02) Pay Your Credit Card Bills As Much as Possible
Ideally, you’d like to have as little debt on your card at any given time, as we explained above. But if you’re paying bills with credit, it’s impossible to have zero debt. The best you can do is pay off the debt as soon as it appears on your bill.
What if you have bills that pop up at different times of the month? Well, why not pay off that debt as soon as it happens? No lender has ever set restrictions on how many times you can pay them! You can improve your credit not only by paying on time, but by paying off debt as soon as it appears…constantly keeping your credit utilization low.
03) Pay Rent Via Credit Card
If you understand the importance of keeping your utilization low, it will actually benefit you to take care of some bigger bills with your credit card. Few people have bigger bills than rent!
RentPayment.com is a great site to use if you want to do just that. This site uses an autopay system to make monthly payments on time for you (and it has a guarantee to pay late fees if an error occurs). This site is an especially nice option for those looking to build credit because it reports your payments directly to TransUnion, which by itself will boost your credit score.
04) Become An Authorized User
You can always ask Mom and Dad for help with the down payment, but they can’t do anything for your credit score. Or can they?
Your credit cards aren’t the only ones that can boost your rating. If you become an authorized user on someone else’s card, you’ll also benefit in part from their positive credit score. You don’t need to make a purchase…just piggyback your way to better credit!
There is a risk for those who use this method, however: Just as their good behavior can give your credit a positive boost, bad spending behavior will come back to haunt you as well. So don’t just become authorized with all your friends from college!
05) Put A Freeze on A Bureau
This is a more desperate move but can still have some benefit on your credit. If you do a soft credit check (via Credit Karma or similar service), you’ll be able to see which credit bureau is giving you the lowest score…and therefore which one you particularly don’t want creditors to see. You can go to the bureau’s site and pay a fee in the $10 region to have them freeze your account until you tell them otherwise.
This means when a creditor goes out in search of your credit score, the lowest entry will be out of sight…making you look better in the process.
As we mentioned before, all of these options can help in the short term but make sure to take steps to keep your credit high by paying your bills and responsible spending. A “high score” in this game leads to a bigger home and better financing options.