SCORE
Take advantage of the rules.
Too many credit applications can lower your score. Multiple inquiries signal that you are having trouble successfully securing a loan and may be a credit risk or undesirable borrower. However, multiple inquiries from the same type of lender, such as a mortgage company, are counted as a single inquiry if submitted over a short period of time.
Reduce your debt.
Creditors look for an optimal total debt load of around 36 percent of your household income. If your monthly mortgage, car loan and revolving credit card payments total more than 36 percent of your monthly salary, you will likely need to find a way to lower your overall debt before applying for a new loan.
Pay on time.
The easiest way to raise an ailing credit score is to make all your loan payments on time every month. Over the span of several months, you will likely see your credit score improve. When making credit card payments, you should set up automatic payments and always pay more than the minimum payment due. This will prevent you from incurring large amounts of interest and will make you a more desirable borrower.
Timing is everything.
Wait 12 months following a credit problem before applying for a mortgage or a car loan. You will be penalized less for problems that are more than a year old. Get your finances in order.
Avoid credit card purchases prior to applying for a major loan and stay away from independent finance companies with high interest rates, which reflect poor credit management. Transferring debt from one card to another is another way to reduce your credit score. Of course, paying off credit cards every month is ideal, but if that is not possible, steadily pay down the debt.
