Your Credit Score Can Stall Your Dream

7 Ways to Raise - or Lower - Your Credit Score

Unless you were born wealthy, your credit score requires care and attention!

Dreams require creditor approval, which is based on your credit score. Before your dream is squelched by a low credit score, you are going to want to meet Charlotte and Jim.

After five years of marriage, Jim mentioned his dream of owning a country property closer to his family’s homestead. He had a banker friend, Paul, who asked him some questions at lunch one day. The answers to those important questions revealed some shortcomings in his credit profile. Fast action was going to be required to prevent delays when the right property became available.

Maybe these questions can help you:

1. Are your bills paid in full - and on time?

Paying every bill on-time affects your credit score more than any other factor. When your bills are paid before the due date, creditors view you as responsible with money. This practice conveys lower risk in extending credit to you.

On the other hand, if you pay bills late and have unpaid debts, your credit score will be affected quickly and until those debts are brought current or paid off entirely.

Debts that are turned over to collection agencies, charged off or resulting in judgments will have lasting impacts on your credit score.

Jim remembered that an old loan was still in default status on his credit history. He made a note to address this situation soon.

2. How often are you using credit cards to make purchases?

This question gave Jim pause because he whips that credit card out for every purchase. He wondered what limits were unknown to him. Paul mentioned that maxed out credit cards were considered risky.

Paul mentioned the importance of having more than one credit card and using both during the month. Constant use of one card can create perceived risk to the creditor. He went on to explain that keeping all credit card balances below 30% of the credit card limit would improve the credit score.

Jim did know that all of his credit cards were paid in full each month. Sometimes Charlotte would make an extra payment just to get the money off the card earlier. Paul told him that was an excellent practice.

Paul reminded Jim to not close any credit card accounts. Cutting up the card and not using the account is preferable to actually closing the account. Jim was unaware that the credit score can drop significantly if accounts are closed.

As the questions kept coming, Jim realized he had some work to do before pursuing credit for his dreams.

3. When did you start using credit instruments?

Jim and Charlotte had opened credit card accounts in the first year of college, but managed the debt carefully each month.

Once Jim started working, he took out an auto loan, which he paid off on time, but not faster than required. In recent years, he had paid for a new car with cash.

Paul explained the importance of having a long credit history with old accounts in good standing. He emphasized the importance of longevity on the credit report. Creditors want to know that you have managed credit responsibly over the years.

Carrying balances and paying interest is not required to build a strong credit history.

Jim was encouraged to know that his credit history was long and relatively clean, but he knew that old loan was weighing on his credit score.

What If You Use Your Credit Card Daily?

4. Do you have installment loans and credit cards?

A shared credit card account was the primary credit instrument that had built the couple’s credit history in recent years. The common belief that less available credit was better can appear weak to a lender.

Charlotte had store cards in her own name, but Jim had never even applied for one. He made a note as Paul explained the importance of the credit mix. 

Jim asked if a card from a home improvement store would help. Paul asked Jim to wait until after the house purchase.

Charlotte had wanted a new car, but that purchase would have to wait even if they were not currently paying on an installment loan.

The primary reason for mortgage approval to be declined, or a pre-approval reversed, is a last-minute auto loan. Jim was surprised when Paul reminded him to not take out any new credit until the mortgage was approved and closing had taken place.

Listening to Paul’s advice required setting aside  assumptions and take some careful notes.  Timing would be important if a property were to be financed in the current year.

Jim did ask about student loan debt and the importance of repaying those loans.  Paul recommended refinancing of the student debts.

5. What credit actions have you taken in the past 60 days?

Since Paul understood that this couple wanted to buy a house, he asked Jim specifically about the recent credit applications.  Paul explained that the credit score can drop fast if too many credit checks happen.

Targeted applications within a 14-45 day period will not appear on the credit history.  Paul wanted Jim to make careful choices with reputable creditors at the right point in the financing process.

Jim had always thought that he could apply anywhere and everywhere when he wanted to buy a house.  All of a sudden, Jim began to realize the importance of every credit action.

He realized that a credit strategy would be required to improve the credit score and strengthen his credit profile.

6. Do you monitor your credit score and report?

When Paul asked this question, Jim had to admit that he had never requested full credit histories from the three credit bureaus for Charlotte and himself. He had seen the commercials promising quick fixes for credit scores. He was realizing that was a myth.

Entering the home mortgage application process without detailed information from his credit history would lead to issues with potential lenders. He had no idea if his credit history had marks from years ago. In addition, he was unsure of the contents of Charlotte’s credit history. Inaccuracies are common on credit reports, according to Paul.

Requesting those credit reports would be the top priority as soon as Jim got home. He wanted to the simplest way to get his hands on those reports while protecting their personal information.

7. Were you consistent in using your full legal name on every credit application?

Once Jim heard this question, he reflected on the many versions of his own name that he had used on various credit applications in the past. He would have to ask Charlotte how her name appeared on her store accounts.

Using his full legal name would reduce the risk of inaccuracies on his credit report. He would have to contact creditors that did not have his legal name on record.

Paul’s knowledge was exposing how much Jim had to learn about managing his credit profile.  Charlotte would be interested to participate in this credit strategy that would verify both credit histories, improve the credit standing on both reports and raise the credit score for Charlotte and Jim.


Jim had wished he was not on his way back to work, so he could get started on all of Paul’s recommendations right away.  He would have to make some notes before he forgot all that Paul had shared.

If you, or anyone you know, has a dream that could die at the hands of a credit score, please share this article with them.

How Many Names Did You Use on Credit Apps?

error: Content is protected !!