5 hacks for improving your credit score

Ways to improve your score short and long-term ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ [Better] [Better]( This week's mortgage rates [Rate chart] [Rate chart]( Source: US average mortgage rates from [FreddieMac]( --------------------------------------------------------------- Better Mortgage Interested in today's rates? [See Better Mortgage rates]( --------------------------------------------------------------- #FundFact 💳 The average credit score of Americans, as measured by the FICO score, increased for the first time in about 2 years in early 2023.¹ Things to know 5 hacks for improving your credit score 5 hacks for improving your credit score For most Americans, becoming a homeowner is one of the biggest financial investments they’ll make during their lifetime. Unless they’ve got cash on hand, a mortgage loan is what helps make their home purchase possible. In fact, 78% of homebuyers financed their home purchase in 2023.² So, how can you set yourself up to be a strong mortgage applicant when the time is right? Qualifying for a mortgage isn’t always black and white; eligibility criteria will vary depending on the mortgage lender and the type of mortgage product you’re interested in. While there are many different factors that come into play when it comes to getting a mortgage, having a good credit score is high on the list across the board. You’ll want to secure a credit score that is more than just strong enough to qualify for a mortgage, so you can qualify for the best rates available. Even a small difference in interest rates can translate to thousands of dollars of savings over the life of your loan! 5 hacks for improving your credit score - Pay off your bill early: Paying your bill off early allows you to reduce your total balance due before it gets reported to the credit bureaus, which in turn lowers your credit card utilization. The lower your credit card utilization, the better. - Request a higher credit limit: Increasing your credit limit is another way to potentially lower your credit card utilization. Keep in mind that if you continue to spend beyond your means, the additional debt will likely outweigh any potential benefits and could end up having a negative effect on your credit score. - Become an authorized user: An authorized user is granted permission to make purchases on someone’s primary credit card account. Becoming an authorized user can lengthen your credit history. Authorized users can make purchases through a credit card connected to the account, however, only the primary cardholder is responsible for accrued debt. - Report your rent and utility payments: If you’re a renter, reporting your on-time rent and utility payments can help you build credit since it’s a large and recurring monthly expense. While you can’t report these payments on your own, there are [numerous rent-reporting services]( that exist to help you do so. - Use a credit-builder loan or secured line of credit: [Credit-builder loans and secured lines of credit]( are financial products that are designed to help you build credit without a credit card as you make payments toward your loan. Since they’re made to help you build credit, good credit or credit history isn’t required for approval, which makes them a good option for someone just getting started on their credit building journey. DISCLAIMER: Better and its affiliates do not provide financial advice and you should consult your own financial advisor before engaging in any transaction. [Rate chart] [Rate chart]( [Source: What's in my FICO® Scores?]( How does your credit score work? There are different ways to measure your credit score, but the FICO Score is used by 90% of top lenders to help determine your creditworthiness for a mortgage.³ While FICO Score 8 and 9 are widely used versions of the FICO score, in mortgage lending FICO Score 2, 4, and 5 are the most commonly used.⁴ The FICO Score model uses different pieces of credit data, which is grouped into 5 different categories, to determine your credit score. High impact credit data - Payment history: Your payment history has one of the largest impacts on your overall credit score, so it’s important to make sure you have a strong track record. Making your payments consistently and on time will help build payment history. - Credit card utilization: Your credit card utilization is the amount of debt owed compared to the amount of credit available to you. If your credit card utilization ratio is too high, it can indicate that you’re overextending your credit which could be a potential risk for a lender. As a general rule of thumb, you want to try to keep your credit utilization below 30%.⁵ Medium impact credit data - Credit history: Your credit history gets better as your credit ages, a longer credit history will always have a positive impact on your score. Pro tip: If you have a credit card with an annual fee that you don’t want to pay anymore, call the credit card company to see if you can downgrade it to no fee but still keep the line open so you don’t hurt your credit age. Low impact credit data - Credit mix: Having a diverse set of tradelines, otherwise known as the credit accounts listed on your credit report, helps show that you’re capable of managing different types of credit. You should aim to have a good balance between installment (auto loan, student loan, mortgage) and revolving credit (credit cards, retail store or gas station cards, lines of credit). - New credit: When you apply for new credit, it remains on your inquiry report for 2 years, however they typically only impact your score for a year.⁶ New credit inquiries will knock your credit score down a couple of points. In addition, constantly opening new lines of credit may indicate that you are struggling with financial pressure. --------------------------------------------------------------- Better Mortgage Did you buy a home when rates peaked last year? [Check your refi savings]( --------------------------------------------------------------- Press play Follow us on social to stay up to date with the latest mortgage tech, tips, and tools: Watch on [TikTok]( • [Instagram]( • [YouTube]( • [Facebook]( --------------------------------------------------------------- Better Mortgage Questions? Connect with a mortgage expert now [Apply today]( --------------------------------------------------------------- Quiz Can you get a mortgage commitment from a lender before you find a house? - No, you need a purchase contract to receive a mortgage commitment. - Yes, you can receive a mortgage commitment at any time. - Yes, if you’ve been pre-approved for a mortgage. - Yes, if you pay a rate lock fee. [Better] [Better] [social]( [social]( [social]( [social]( ¹ [Statista]( ² [National Association of Realtors]( ³ [MyFICO]( ⁴ [MyFICO]( ⁵ [Experian]( ⁶ [MyFICO]( © 2024 Better Home & Finance Holding Company and/or its affiliates. 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