Set your sights on more than 620 credit score

Q: I am cur­rently try­ing to buy a house for the first time. I am apply­ing for a VA Loan but seem to be under the min­i­mum credit score. I believe they told me it needed to be 620 and I have a 610. Is there any­thing I can do to bump this up quickly? Thanks for your help!

–Roberto, San Anto­nio, TX

 A: Whether or not you can get a mort­gage, with a credit score of 610 or 620 you’re not really sit­ting in an ideal place. In fact, being at 750 or higher is what you should be shoot­ing for, espe­cially in today’s tight lend­ing envi­ron­ment. A higher score will ensure you’re able to bor­row when you need to, and also get a com­pet­i­tive rate. My point is that whether you are able to inch your score up in the near term or not, you should be striv­ing to bump your score up big time over the long haul.

 The chal­lenge is that every person’s credit sit­u­a­tion is dif­fer­ent and will be impacted in a dif­fer­ent way by dif­fer­ent actions. What we do know is that over the long haul there are sev­eral key fac­tors that drive your score:

 Pay­ment his­tory: pay on time every time, period.

What you owe: what you owe rel­a­tive to your avail­able credit makes up the all impor­tant “uti­liza­tion ratio”—less is more. Shoot for a ratio of 30% or less.

Num­ber of inquiries: lots of credit appli­ca­tions is not good for your score.

Types of Credit: install­ment loans, revolv­ing credit, and mort­gage debt—a nice mix of dif­fer­ent types of credit is good for your score, so diversify.

Length of credit: a long his­tory of respon­si­ble use of credit is a pos­i­tive. Keep those older credit accounts active.

 Fol­low the above guide­lines and over time you’re score should increase. As far as short-term fixes, here are a cou­ple strate­gies that might help nudge up your score in the short term:

 Check for errors: are there errors on your report that are caus­ing your score to dip. Per­haps another person’s bad credit actions are on your report or incor­rect credit lim­its are being used to cal­cu­late your uti­liza­tion ratio. Who knows, there are lots of errors on credit reports and you may be able to dis­pute errors. Visit www​.annu​al​cred​itre​port​.com to view your report.

 Raise your lim­its: ear­lier I men­tioned the uti­liza­tion ratio as an impor­tant fac­tor in your score. Well you can drive that ratio down by pay­ing off debt and that’s a good thing, but you could also reduce the ratio by rais­ing your avail­able lim­its. I’m not say­ing use more credit, just request higher lim­its to help improve this ratio.

 Good luck in mov­ing towards a much higher score. It will take some time, but in the end it will save you a lot of cold hard cash in lower inter­est rates and a whole lot of headaches in terms of access­ing credit when you need it.

5 responses to “Set your sights on more than 620 credit score”

  1. Pay­ing on time is always a good idea, but are you refer­ing to util­ity bills and such? How about den­tist bills and the like if they’re big, but get peri­odic payments?

  2. I recently applied for a VA loan but found out some very dis­turb­ing news. I had stuff on my credit report show­ing unpaid that had been paid for a cou­ple years. Is there any­thing I can do about that? I have already dis­puted them and they are show­ing paid, but the dam­age to my credit score is done now because they just got fixed. I am sit­ting at a score of 599. I am short term look­ing for the 620 and long term look­ing for way more. What can I do right now to get those points to get my house?

    1. Bradley, I work with dam­age credit call the time. Please feel free to give me a call at 630–606-9921 Cpl. Ronald Peake, Jr. USMC

  3. June’s infor­ma­tion is mis­lead­ing & only use­ful for peo­ple with credit already becom­ing… Nowhere in this arti­cle is there help in try­ing to weed out the bar­rage of 5 year old med­ical bills for $25 that shouldn’t be on your report. Those have no bear­ing on mak­ing for a good report, but every­thing to do in mak­ing a bad one…

    Nor is there any regard for estab­lish­ing credit for folks with­out credit to begin with. The credit sys­tem was cre­ated by greed dri­ven indi­vid­u­als who want to make the­o­ret­i­cal money from real money. I.e., deriv­ing pay from no work.

    Rais­ing lim­its, Num­ber of inquiries, Types of Credit, Length of credit, all those exam­ples were com­pletely use­less because credit has to be estab­lished in some form or fash­ion (in bulk) for any­thing of account to hap­pen. And TIME is not always a lux­ury we can count on.

    Thus becomes another avenue we all become taken advan­tage of through APR & com­pressed pay­ment sched­ules. All the more rea­sons the pay­day loan & legal­ized loan shark estab­lish­ments exist today.

  4. muito bom..!

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Examples given are hypothetical illustrations and not an indication of the benefits or features of any USAA product. You should seek policies and advice based upon your own particular circumstances. Sample loans are for illustration purposes only and are not a rate quote, pre-approval, or commitment to lend.

Scott Halliwell and JJ Montanaro are CERTIFIED FINANCIAL PLANNER™ practitioners with USAA Financial Planning Services, one of the USAA family of companies. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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