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Raising your credit score IQ: What you need to know about leveraging your credit score

2022-06-10T17:13:26+00:00
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According to some statistics, the average credit score in the United States is 698, although this number may vary depending on where you live. This three-digit score serves as an indicator of your financial health, which directly influences the types loans you can access and what rates you get.

Maintaining a credit percentage above 580 is considered «Fair»; between 670 and 739 is «Good»; from 740 to 799 is “Very Good”. Finally, an «Excellent» score of 800 is seen as the ultimate goal that anyone who wants to obtain the most financial benefits, such as a mortgage or home loan, should aspire to. But what are the best tips for maintaining an optimal credit score? Here we tell you!

Obtain an ITIN

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One of the main reasons why it is advisable to maintain an excellent credit score is because it makes it easier to obtain a mortgage, whether you’re buying your first home, building it or investing in a second property. However, for many people it can seem complicated, especially if they have not defined their legal status in the United States.

This doesn’t have to discourage you since it is possible to request an ITIN number or Individual Taxpayer Identification Number, designed for people who work in the United States and who pay taxes. With this, it is easier to build a credit history and gradually improve your score.

Request a personal loan

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Institutions such as Rocket Mortgage offer you the option of requesting a mortgage loan to be used for the purchase, renovation or construction of a house; but before obtaining it, it is a good idea to request a personal loan with your banking institution, in order to cover some important or urgent expense, since making payments on time could contribute successfully towards obtaining a credit score even higher.

This is due to several reasons. One is that by applying for a personal loan, you build a track record within an established financial institution and, if covered in a timely manner, your score could rise considerably once you’ve paid off the debt.

Apply for a credit card

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If you are not yet ready to apply for a mortgage or personal loan, your next option is to apply for a prepaid or secured credit card that, in addition to not affecting your credit score, presents you to financial institutions as a responsible person who is capable of paying their debts.

Maintaining a favorable credit history is an exercise that requires all your attention and organization. If you think that you require extra help, consider the possibility of requesting a secured card, for which you will pay a certain amount in advance that will serve to guarantee future payments.

Make sure your credit report is accurate

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Do you notice something in your credit report that does not match your real financial situation? Perhaps it is time to request a clarification. However, this can only happen if you make it a habit to periodically review your credit situation. Remember that being aware of these types of errors could avoid penalties and increase your credit score.

Verify that all the information found in your history is correct — from your name to the loans or accounts that you have, and whether you have any late payments. In this way, if there is a resolution in your favor, your report will be modified and you will be able to request a mortgage loan or personal loan more easily.

Make sure your rent payments are reported

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For some taxpayers, rent represents about 30% of their annual salary. In some cases mortgage payments can be even less than rent payments. However, if you are currently renting a house, check that all your payments are being reported, as this will help improve your credit history.

Reporting your rent is especially favorable when you still do not have a «suitable» credit score to apply for a mortgage loan. According to experts this is a crucial step on the path towards the purchase of your first property.

Don’t close your accounts

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People who find themselves struggling with unpaid debt could see their credit score drop. While it may seem like a good idea to close those accounts, this could work against you as it could impact your ability to raise your credit score and that could make it difficult to buy a house when you’re ready.

So why should you keep those accounts open? If these are in force, collection agencies and financial institutions would have the power to report them to credit agencies, and entering a clarification process would mean a delay in your purposes of buying a new home.

Refinancing may cause finance charges to be higher over the life of the loan.

Rocket Mortgage, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Equal Housing Lender. Licensed in 50 states. AL License No. MC 20979, Control No. 100152352. AR, TX: 1050 Woodward Ave., Detroit, MI 48226-1906, (888) 474-0404; AZ: 1 N. Central Ave., Ste. 2000, Phoenix, AZ 85004, Mortgage Banker License #BK-0902939; CA: Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; CO: Regulated by the Division of Real Estate; GA: Residential Mortgage Licensee #11704; IL: Residential Mortgage Licensee #4127 – Dept. of Financial and Professional Regulation; KS: Licensed Mortgage Company MC.0025309; MA: Mortgage Lender License #ML 3030; ME: Supervised Lender License; MN: Not an offer for a rate lock agreement; MS: Licensed by the MS Dept. of Banking and Consumer Finance; NH: Licensed by the NH Banking Dept., #6743MB; NV: License #626; NJ: New Jersey – Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226, (888) 474-0404, Licensed by the N.J. Department of Banking and Insurance.; NY: Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226 Licensed Mortgage Banker-NYS Department of Financial Services; OH: MB 850076; OR: License #ML-1387; PA: Licensed by the Dept. of Banking –​ License #21430; RI: Licensed Lender; WA: Consumer Loan Company License CL-3030. ​Conditions may apply.

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