Improving your Credit Score so you can buy a house in San Diego

Buying a home today is not as easy as it once was.  Just a few years ago virtually any credit score was good enough to qualify for a home loan.  Not today.  Your credit score is very important when it comes to qualifying for a home loan.

If you have a decent credit score but are looking to obtain that elusive 800 score, what steps do you need to take to improve your score?  Below are just a few tips suggested to me by experts in the business.

1.         Make sure the information that each of the three credit reporting bureaus has on you isconsistent and up to date.  There are many different sites where you can order your credit report for free.

2.         Get a credit card if you don't have one.  Having and using a credit card or two can really build your scores.  Make sure you make an "on time" monthly payment.

3.         Add an installment loan to the mix.  You'll get the fastest improvement in your scores if you show you're responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans).

4.         Pay down your credit cards.  Lenders like to see a big gap between the amount of credit you're using and your available credit limits.  Getting your balances below 30% of the credit limit on each card can really help; getting balances below 10% is even better.

5.         Don't use your whole credit line every month.  Your available credit is averaged over your billing cycle, which is sometimes less than 30 days. If your limit is say, $5,000 and you charge $5,000, even if you pay it off each month, your credit balance is still going to show $2,500 (a 50% usage limit), which is going to make your score plunge.

6.         Dispute old negatives.  Say your insurance company never paid a medical bill and now you have a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as "not mine."

These are just a few ways to improve your scores.

How is your score determined?

1.         Payment history: 35 percent
2.         How much you owe: 30 percent
3.         Length of credit history: 15 percent
4.         New credit: 10 percent
5.         Types of credit: 10 percent