Five tips for helping your clients boost their credit scores

Credit scores are one of the largest factors that lenders use in evaluating whether or not to lend money to a borrower. Credit scores are designed to measure the risk of someone defaulting by taking into account various factors in a person’s financial history.

Credit scoring is predicted on five basic factors: payment history; the level of outstanding debt; the length of the credit history; the number of inquiries on the report; and the types of credit present.

Realtors® do not need to become experts in credit scoring and credit repair. Instead, they can provide their clients with the information they need to do the work themselves and try to boost their personal credit score.

Here are some valuable tips you can offer your clients to get them started:

1. Use free credit reports. Free credit reports can be obtained using annualcreditreport.com. Be sure to check for errors that can negatively impact a credit score and dispute any discrepancies. Clients will need to pay $20 if they wish to obtain their genuine FICO scores from myfico.com.
2. Pay bills on time. Make payments on your credit cards and installments on time or before. Make at least the minimum payments on outstanding bills. A credit card is a credit-building tool when used correctly.
3. Ask lenders to lower the interest rate. If clients are looking to pay off debt quickly, suggest they ask their lender if they will lower the interest rate. It may work in their favor.
4. Say no to new credit accounts. Every time you open a new credit account, it will lower your credit score for the next few months. Resist the urge to save that 10 percent that many stores offer when opening a new account.
5. Keep older credit lines open. Having a long history of active accounts indicates that you are a good credit risk. Try to use your oldest cards regularly for small purchases and pay balances each month.