So you want to own a house: repairing your credit score

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repairing credit

Improving your credit score can mean a number of things, especially if you want to own a home! Having good credit is attainable and the easiest way to attain it is by not letting your score dip.

It is immeasurably harder to repair your score then to maintain your score. Things do happen, and if you have a score that has dipped don’t worry it can be fixed!

How to repair your credit:

Step 1. Review your credit report.

How are you supposed to fix your credit score if you don’t know what it is and what is on it! Visit to check your credit score and see what is on it. It’s a free service and you are allowed one free check a year.

Step 2. Repair your Payment History.

This is the big one. If you have late payments on credit cards or loans, that can trigger a mark on your score. Sometimes those marks can sit on your credit report for 7-10 years! Making on time, monthly payments is the best way to repair your score. Remember your credit score gauges your trustworthiness and how apt you are to repay your loan.

Think about it like this, a friend asks for $100, but you know that your friend will never pay you back. Do you make the loan? Of course not! Your bank does the same thing when looking at your credit score. The lower your score the less likely the bank thinks you will repay your loan. So next time you decide to not pay the credit card bill, maybe think again.

Step 3. Credit Utilization.

Once you get your payments in order and everything is running smooth it’s time to check your credit utilization.  Credit utilization is your total debt divided by your total available credit.

If you owe $3000 and have a $10,000 credit limit, your credit utilization is 30% (3000/10000=30), which is good. Rule of thumb, maintaining some credit is okay but it must remain manageable.

Step 4. How many credit accounts do you need?

If you have credit cards that are completely paid off and in good standing, great! You don’t need to close them! Be smart about how you use them but every line of credit you have goes into your credit utilization (less debt + more credit = lower credit utilization score, low is good).

It is also beneficial to keep those accounts open because it increases your credit history. The longer your credit history, the better for your credit score.

Step 5. Resist the urge to open more accounts.

Back in Step 3 we mentioned how if your debt is 30% of your credit limit you’re in the sweet spot. That is true if you have established credit. If you have a credit card that is maxed out at $5,000, do not add multiple credit cards just to raise your credit limit! Doing that will earn a few red flags, and your score may drop.

Step 6. Repair your Payment history!

Sound familiar? It should, it’s the same as step 2! Repairing your credit is not something that can be done in a matter of days. It will take some time and energy but the best way to repair your score is to continue making monthly payments on time, every month and to eliminate some of your debts!

Think you are ready to own a home? We have different options that can fit every need. Have more questions on how to repair your credit? Call 218-346-5700 and speak with one of our mortgage professionals. We would love to help you become more credit conscious and are will to assist in any way to help put you in your on home!

Part 1: What is credit?
Part 2: Establishing Credit