The new year is upon us and 2020 is the year you are buying a home. Well, as long as your credit is where it needs to be. Many people think that when you go to buy a home you need to have 20% down and an 800 credit score. While having these things sure do help, they aren't necessary to purchase a property. You can buy a home with as little as $1,500 down with really good credit. I try to stress to my friends and family that credit is a huge factor when it comes time to buy a home. But what if your credit isn't where it needs to be? There are many credit repair companies that will charge you to help bring that score up, but first, I recommend trying these for free. Here are 6 hacks to easily improve your credit score.
1.) Know Your Credit Score
The first step in repairing your credit is to figure out what your credit score is so you can plan out how to improve it. You can get your full credit reports from the three credit bureaus (Experian, TransUnion, and Equifax) for free once a year. You can do so here: www.annualcreditreport.com (I don't recommend Credit Karma because of how inaccurate it can be.)
2.) Dispute Errors
While errors are not super common, they do happen. Look through your credit reports thoroughly and dispute any errors that might be there. Make sure that all your info is correct and highlight any errors you might find on your report. Next, you want to gather any information that you have to back up your disputes. Once you have all this information, write a detailed letter to the specific credit reporting agency showing the dispute and why it is not correct. The credit agency is required by law to respond to your letters within 30 days of receiving it.
3.) Create a Budget
Review your tax returns from the past 2 years and determine how much money you are actually bringing home each month. Subtract your monthly expenses from your current monthly income. Make sure to include all of your monthly expenses and give yourself a set amount for variable expenses like groceries, gas, eating out, etc.
4.) Don't Miss Any Bills
Pay all of your bills on time moving forward. Get caught up on any bills you may be behind on and continue to pay each bill on time every month. On-time payments are the single most important factor to your credit score.
5.) Pay Off Those Credit Cards
Don't ever have your credit cards maxed out. Credit bureaus analyze your debt as a ratio. If you charge $500 on a card which has a $1,500 limit, you’ve used 33 percent, which is better for your credit score than charging the same amount on a card which has a $1,000 limit (50 percent), both of which are better than being maxed out (100 percent). Get your credit card balances down but don't cancel them, even if you don't have a balance.
6.) Don't Apply For New Credit
Every time you apply for a credit card your credit takes a hit and is reported as a "hard inquiry". In general, a consumer with good credit can apply for credit a few times each year before it begins to affect their credit score. If you’re already starting with below-average credit, however, these inquiries may have more of an impact on your score and delay your ultimate goal of watching your credit score climb.
If you see any errors, dispute them with the credit bureaus. Then, focus on paying down any credit card debt while making every bill payment on time. In the meantime, do not apply for new credit. Basically, in order to repair your credit, you will need to limit your use of credit.
It may take months or even a couple of years for your credit score to improve.
https://www.moneyunder30.com/credit-repair By Dillon Landfried - Jan 9, 2020