Issue Date: October 5, 2007

7 Steps to a Higher Credit Score

By Jody Zink
Licensed Realtor in Ohio & Michigan

Living within your means is one of those things my parents and grandparents have drilled into me. "Ask yourself if you really need it," they say. I'll stand there with my shopping cart at my favorite neighborhood Target (or Costco) and think awhile. And I usually decide that I don't need whatever it is I'm pondering upon. Now, I certainly have my weak moments. Like the plush, fluffy socks I bought this weekend. An impulse buy for sure. I justify it because they were on sale. Granted, buying a plush pair of socks doesn't put one into bankruptcy, but habits over time really do add up.

Credit scores, together with your overall debt and income, play a big role in determining if you'll qualify for a loan and under which terms. In addition to some good old fashion discipline, here are some ways to improve your numbers.

1. Know what's on your credit report. Go to AnnualCreditReport.com. Every 12 months you can request a FREE report from each of the big three credit reporting agencies: Equifax, Experian and TransUnion. Check for and correct any errors. A bankruptcy filed by Jack E. Frost can wind up on Jaque K. Frost's record by mistake. It happens. Make sure you're not paying for someone else's poor financial management.

2. Shop for mortgage rates all at once. Lots of inquiries and applications can lower your score, but they're only counted as one inquiry if they're submitted over a short time frame by the same type of lender.

3. Eat in and cook more. Wow - eating out adds up fast. I'm guilty. After some thought, I realized I could cut my bill by 50 percent (half!) if I'd just tame myself from eating at restaurants eight days a week. Those who know me also know I'm a dessert person. The markup is obscene. I've been making my own coffee and desserts lately, saving money and not to mention calories. My dining out is now limited to 3 meals per week.

4. Pay your credit card balance each month. Obvious, right? But sometimes easier said than done. Don't charge your cards to the maximum limit. And transferring credit card debt from one card to another can lower your score. Before making the purchase, ask yourself if you really need it.

5. Avoid opening new credit card accounts before applying for a mortgage. Too much available credit can bring your score down.

6. Wait until the bank has approved your loan before charging furniture and appliances. Those amounts will add to your debt.

7. If you've had some credit difficulties, you're not alone. Wait a year to apply for a mortgage. After 12 months, the penalty is less severe.

Buying cans of coffee by the boxcar-load is more cost effective than a daily trip to Starbucks, especially if you drink coffee like a fish. I'm convinced that social time spent with my cat Ted, a cup of coffee on the couch while wearing my new plush socks is a good financial move.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.