Building and Protecting Your Credit Score

Whether you're preparing to buy your first home, refinance, or invest in real estate, your credit score is crucial to keeping your costs low. Lenders use your score to determine not only your eligibility for a loan but also the interest rate on your loan—potentially saving or costing you thousands over time.

Maintaining a good credit score or improving a poor score are the two most important things for a new home buyer to keep in mind. Here are some tangible ways to maintain a strong credit score, improve a poor score, and monitor your score along the way.

How to Maintain a Good Credit Score

If you already have solid credit, the goal is to protect it by…

1. Paying every bill on time
   Your payment history is the single biggest factor in your credit score. Even one missed payment can cause a noticeable drop.

2. Keep credit card balances low
   Use less than 30% of your available credit—ideally under 10% for the best scores.

3. Avoid unnecessary new credit accounts
   Opening multiple new accounts in a short period can lower your score and raise red flags with lenders.

4. Keep older accounts open
   The length of your credit history matters. Even if you don’t use an old card often, keeping it open can help your score. Even if you’re trying to get out of debt, just pay the card off, don’t close the account. Doing so could damage your score significantly.

How to Improve a Poor Credit Score

If your credit score needs some work, here are some easy steps you can take to rebuild it.

1. Catch up on missed payments
   Bring all accounts current as soon as possible. Late payments lose impact over time, but recent ones matter most.

2. Pay down existing debt
   Reducing balances—especially on credit cards—can quickly improve your score.

3. Dispute errors on your credit report
   Mistakes happen. Incorrect late payments or accounts that don’t belong to you should be addressed promptly. See note on How to Monitor Your Credit Score below.

4. Become an authorized user
   Being added to someone else’s well-managed credit card can help boost your score.

How to Monitor Your Credit Score

If you’re looking to purchase your first home, purchase an investment property, or move (and thus obtain a new loan) in the near future, staying informed about your current credit score is just as important as building good habits.

1. Check your credit regularly
   Go to www.annualcreditreport.com to review your credit reports to ensure accuracy. There are often mistakes on your credit score (much more often than you might think!) that can result in an undeserved lower score. Follow the credit bureau’s instructions for clearing up any inaccurate accounts.

2. Use free monitoring services
   Many banks and financial apps offer free credit score tracking and alerts. While these are not perfectly accurate, they will give you a decent idea if your score is going up or down.

3. Watch for identity theft
   Unexpected changes in your score or unfamiliar accounts could signal fraud—act quickly if something looks off.

Final Thoughts

Your credit score is one of the most powerful financial tools you have—especially in real estate. Whether you're maintaining excellent credit or rebuilding from challenges, small, consistent actions can lead to meaningful improvements over time.

If you’re thinking about buying or refinancing, now is the perfect time to take control of your credit and set yourself up for success. If you have questions or would like to discuss other ways to improve your credit in preparation for applying for a mortgage, please reach out. I’d love to schedule a call with you to discuss your personal situation.