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Top Tips to Build and Maintain Your Credit Score

1. Pay On Time: The most straightforward tip, yet vital. Always pay your bills, loans, and credit cards on or before the due date. Your payment history plays a significant role in your credit score.

2. **Keep Balances Low**: For credit cards and other revolving credit lines, maintain low balances. A high credit utilization ratio (debt to credit limit) can adversely affect your score. Ideally pay off your revolving credit balance such as credit cards and lines of credit each month. If that isn't possible aim to keep your balance at 30-50% of the available limit.

3. Limit Hard Inquiries: When credit lenders check your credit for lending purposes, it's termed a hard inquiry. Too many of these in a short time can lower your score, signaling to lenders that you might be a high-risk borrower. If you are shopping for a larger ticket item such as a car or house multiple hard inquiries with in a 30 day period will only be considered one hard inquires and won't have a significant impact on your credit score.

4. Diversify Your Credit: A mix of credit types, like credit cards, lines of credit, retail accounts, vehicle loans, or mortgages, can positively impact your score — but only if you manage them responsibly. Fort mortgage lending purposes, lender are looking for two types of reporting credit, open for two years, with no late payments, over the limits or collections.

5. Avoid Closing Old Accounts: The length of your credit history matters. Closing older accounts can reduce the age of your credit history, potentially dropping your score.

6. Check Your Credit Report: Regularly review your credit reports from major credit bureaus for errors. Dispute any inaccuracies promptly. Equifax is the primaty credit reporting agency mortgage lenders rely on to verify credit worthiness.

7. Reduce Debt: Actively work on reducing outstanding debts rather than moving them around with balance transfers. Avoid filing for bankruptcy or credit proposal. If you have no alternative, filing for bankruptcy has the least negative impact on your credit for the shortest period.

8. Limit New Credit: Opening multiple new credit accounts in a short time can flag you as a higher risk, especially if you have a short credit history.

9. Negotiate: If you owe a past due amount, reach out to the creditor and see if they'd be willing to settle for a lesser amount or make a payment arrangement.

10. Stay Informed: Educate yourself on how credit scores work. Knowing factors that can affect your score, positively or negatively, empowers you to make informed decisions.

Building and maintaining a robust credit score is a marathon, not a sprint. With consistent efforts and responsible financial habits, you'll pave the way for a strong financial future. If you dream of home ownership these tips will help you be mortgage ready.

Tonia Mercer | The Mortgage Missus Inc.

About the author,

Tonia Mercer is an independent mortgage broker. She has been in the industry for 15 years, in 2021 she launched her own brokerage The Mortgage Missus Inc.

Tonia is passionate about financial education and believes that working with independent experts is the best way to get unbiased, professional advice. She has joined forces with local independent home and auto, financial advisor, legal, appraiser and real estate service providers.Effectively creating a concierge service for all things financial and real estate.

Tonia donates a portion of all mortgage revenue to Mercer's Mission, a street dog and cat feeding mission in the Dominican Republic.

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