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By Roger Dolanch, Broker/Owner

Throughout the entire metropolitan Pittsburgh area 29% of all home sales reported through West Penn Multiple Listing Service in the last twelve months were purchased with cash. 71% of the homes purchased were financed. The odds are, that when it’s time for you to buy your next home, you will be financing.

Your ability to borrow and the interest rate offered to you will be greatly influenced by your credit report. Lenders will want to know that you have the self-discipline to manage your money wisely and live within your means. They need some assurance that you will make your payments in a timely manner, and the only proof they have to rely on for evidence is how you have interacted in the past with other lenders. A low credit score, or even no credit score, may prevent you from being able to secure financing.

Repairing bad credit is a lot like losing weight: You need the ability to fight temptation (to spend) combined with a lot of patience. It takes a lot of time because there is no quick or easy way to do it. In fact, of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. When you’re in credit repair mode, you want to know the basics about what to do to improve your credit score. The advice below will help you do that. The information is based on the data used to calculate your credit score.

Review your credit report and fix errors.You are entitled to a free credit report each year, and you should get into the annual habit of requesting and reviewing your credit report. If you spot incorrect credit limits, or other errors on the credit reports, dispute them immediately.

Have open, active accounts that are in good standing.Your credit score is a measure of how well you’ve handled credit accounts in the past. You won’t have a good credit score if you don’t have any accounts at all, or if all of the accounts are closed or delinquent. Maintaining good accounts will boost your credit score. For some, that may mean starting over with a secured credit card because of a bad credit history.

Keep one credit card.Really! A credit card is a valuable credit-building tool when used correctly. The best advice is to charge only a few affordable purchases each month, and then pay the bill in full (before the due date). This will build up your credit rating. It is absolutely critical not to miss or make any late payments to avoid the interest backlash. That said, before cancelling all of your zero balance cards, you should speak to a qualified professional to make certain that is the right move given your specific circumstances.

Keep an eye on credit card balances.The amount of debt you have is another factor that impacts your credit score in a major way. Lower balances are better for your credit score, so if you have big balances, pay them down. Consumers with the best credit ratings have balances less than 10% of their credit scores.It is a good practice to only use a credit card for purchases that could easily be paid out of pocket. Racking up big balances can hurt your score, regardless if the balance is paid in full.Leave paid debts on your credit report.Not all old debts are bad. Documentation of past debts, such as a car loan, provide a track record of how you have handled and paid debts, which can be good for your credit. The longer the history of good debt, the better it is for the score. Keep your accounts out of collections.Debt collection accounts are one of the most serious types of delinquencies you can have. Since any account – even a small library fine or your kid’s cafeteria fees – has the potential to wind up on your credit report, it’s important that you pay all your debts or at least make payment arrangements with the biller.Make sure your credit limits are reported correctly. It’s not just the amount of debt you have that affects your credit score. Credit score calculations compare your credit card debt to the limit on those credit cards. If your credit limits aren’t reported accurately, it can look like you’ve maxed out your credit card. You can dispute inaccurate credit limits with the credit bureau or call your creditor to ask why your credit limit isn’t reported accurately.

It never hurts to ask.If you have debt and are looking to pay it off quickly, simply asking the lender if they will lower the interest rate may work in your favor. If there are one or two late payments on their statements, ask for a goodwill deletion, which can payoff in the long run. 

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