Do you have a FICO score below 740? That could be very expensive when it comes time to get a home loan, costing you thousands of dollars in extra interest. The following tips may help you boost your credit. Some are less intuitive than others.
- Get more credit cards. What? Yes, you heard me. Getting more credit cards can actually help you. If you have several cards, pay on time, and you are well within your credit limits. The credit card companies (and FICO gods) like you.
- If you “only pay with cash”, lenders are wary of you, since you “don’t have credit history”. Likewise, don’t use over 50% of your credit limit. If you have a card with a $200 limit on it, and you have over $100 charged on it, the computer alert programs start flashing red, and lowers your FICO score because, “OMG, this guy has used over half of his credit.” The computers and FICO gods are much happier if, instead you open another credit card with a limit of $10,000 and even charge $4,000 on this, but carry less than a $100 balance on your “$200 limit card.” Makes sense, huh? Okay, not logical sense, but we are dealing with computer programs that are just matching you up again some predetermined criteria.
- Get credit in your name. If all the cards are you in your spouse’s name, and you are simply a “signer” for your spouse’s cards…you aren’t building credit.
- Don’t add signers to your credit cards, unless you know they won’t rack up debt they might not pay.
- Remember, applying for a credit card can temporarily lower your credit score a few points, and applying for a lot in a short period of time will drop it even more, so go easy for starters, and get a free copy of your credit report occasionally.