As a commercial real estate and corporate underwriter, I have a very different view of credit scores than most. A simple score that gives no credence to an individuals income, liquidity or net worth has NO credibility in my opinion.
Regardless of my individual thoughts, the bottom-line is that if you have a low credit score you are going to have a tougher time getting a loan. Additionally, you will probably pay a premium interest rate if your credit score is too low.
4 Ways to Build Your Credit Score
- Don’t shop around for consumer credit. The more people that pull your credit, the lower the score This doesn’t apply for a mortgage or new car loan, but I wouldn’t chance it. Try and get a preliminary rate quote before you give the lender permission to pull your credit.
- Don’t close that line of credit or any credit cards. A big percentage of the score is revolving balance to revolving limits. A high ratio points indicates a borrowers stress to pay.
- Don’t pay charge-offs. Charge-offs drop after seven years. If you pay them you are keeping them open, which is hurting your score
- Don’t open new accounts. Over the long-term a lot of revolving accounts helps you. However, in the short-term opening a bunch of revolving accounts will drop your score significantly.
Above are 4 tactics you can use to improve your credit score without spending any extra time. However, I want to leave you with a bonus tactic that can improve your credit score by over 100 points in 1 month.
My friend recently got turned down for a mortgage because his credit-score was too-low. (see above comments on my personal thoughts on credit scores! My friend makes six-figures, no debt and has $50K …read more