SILVER CLINIC | I Want To Buy A Home – How Can I Improve My Credit Score?
A credit score is determined by several factors.
A Fin24 reader wants to know the best way to improve their credit score in order to buy a home.
I was heavily in debt and worked hard to pay it off. However, my credit rating is still low. I need to buy a house, but I need to improve my credit rating to do so.
I currently have no account except for a contract phone. I have tried to get a credit card so that I can improve my credit rating because I keep reading this is the best way to improve credit rating but it is consistently refused because there is no not enough information on my credit profile. I am now afraid of getting into more debt, especially on clothing accounts.
Benay Sager, COO at DebtBusters, answer :
Consumers often ask what are the best methods to improve credit scores. A credit score is determined by several factors, primarily how long the consumer has been active on credit, the consumer’s payment record, the type of credit they have, the amount of their credit card (if applicable). ) it uses, and a few other factors. While a higher credit score generally makes a consumer a more attractive prospect for a loan, it is not always easy to know what a high credit score is.
More interestingly, sometimes high credit scores are due to the fact that consumers – in some cases those who can hardly afford it – use their credit cards so much each month that their credit card “usage” is high. We understand the situation of this consumer, which is also shared by millions of young people: where to start to build up a credit history?
The advice that is usually given is to start small: with an insurance product (like cell phone insurance) or a retail credit account. It is also important to have a transactional bank account to prove money management to potential lenders. Our advice to this consumer would be to go down this route and start small. Create a checking account and use it regularly for transactions.
When it comes to credit, if his aspiration is to buy a home, then don’t run into a lot of expensive unsecured debt; rather, borrow what he can pay off at the end of the month or better yet save each month so that that amount can be used for a deposit for a house.
Questions can be edited for brevity and clarity.