If you are considering getting a mortgage any time soon, you probably know that having good credit just isn’t good enough anymore. You need to have excellent credit. In fact, many lenders aren’t even lending to borrowers who have traditionally had excellent credit because they are so scared about losing any more money like they did on loans during the financial crisis.
However, if you have good credit, there are some simple steps that you can take to boost that to excellent credit. Editions TV with Terry Bradshaw highlights some of the easy ways that you can get your credit to that top tier.
Editions TV Highlights The Difference Between Good and Excellent
Having good credit is having a credit score between 650 and 750, while having excellent credit is usually having a credit score over 750. The Editions television series shows that the difference between good and excellent can result in thousands of dollars in savings on a loan. However, the difference on your credit report to get from good to excellent is very small. It takes a few small tweaks and tricks to get you to the next level.
Look at Your Loans
The first thing you should do is look at your loans. The credit bureaus like to see a mix of credit types on your credit report. You should have revolving lines of credit like credit cards, as well as fixed lines of credit cards like loans (mortgage, car loan, student loan).
If you don’t think you have a good mix of loans, you should take out a loan even if you don’t need it. For example, if you were planning to purchase a car with cash, you may take out a loan, and then pay it in full. On your credit report, this will look really good because it looks like you had a loan and paid it off (even though you never really needed it).
Since interest rates are relatively low, you could get a loan and pay it off in a few months without paying too much in interest. This will let you have multiple types of loans on your credit report.
There are also a variety of payment tricks that can help you boost your credit score. Editions TV reminds viewers that the credit card companies only report the balance due on your credit card statement on the Due Date. So, if you pay off your credit card in full before the due date, the credit card companies will report $0 owed, which looks great on your report and can boost your score dramatically.
The problem is, that even if you don’t ever pay interest on your cards, you are usually paying during the “grace period”, not when the balance is due. That is why credit card companies report your balance.
This is really crucial right before you’re applying for a big loan, like a mortgage. Say you put all your bills on one card – you monthly balance could easily be $5,000. When applying for a loan, it looks like you have $5,000 in credit card debt, which looks bad even though you pay it off in full each month. That is why it is so important to pay off your balance before the credit card is due, or even better use debit cards instead while applying for a loan so that you balance doesn’t look bad.
Other Factors You Control
Finally, there are a lot of little factors that you can control as well. Your credit report is also based on length of credit history, so the longer you’ve had credit, the better. This is why you should never close a credit card, even if you no longer use the credit card. It still will show up on your report and boost your score.
Second, you are also graded on your debt to credit limit ratio. The goal is to have this as low as possible. One way to rig this score is to call your credit card company and ask them to increase your credit limit. This will boost your score overnight.