From the standpoint of lenders, a person’s credit score is a significant part of the approval process for a home loan. Many people are not aware of what could be helping or hurting their credit and what steps can be taken to start improving the credit score.

So, what helps and what hurts credit scores?

What Helps:

  • Knowledge of credit history. Knowing what’s actually on your credit report is the first step. You can request a free copy of your history annually from each of the three national credit bureaus at You can also view your TransUnion and Equifax reports for free anytime through Credit Karma.
  • Dispute incorrect information. If anything on your credit report is incorrect and can be disputed, write a letter to the Credit Bureau who is reporting the incorrect information. For details on disputing errors click here.
  • On-time payments. Missing payments or failing to pay in full significantly lowers your score, plus you incur unnecessary late payment charges. Some experts suggest that on- time payments can affect up to 40% of a credit score.
  • Pay off debt rather than move it around. Start with the smallest balances and the highest interest rates.
  • Use only two or three credit cards. Keep the revolving balance under 50%. Having two credit cards at a 50% balance is better having one card at 75% and the other card at 25%.
  • Negotiate. If you are in a behind and cannot pay on time, communicate with the lender and attempt to negotiate. Even if you are unsuccessful, taking action is better than taking no action.

What Hurts:

  • Opening multiple cards. Opening new credit card solely to increase available credit will hinder your score.
  • Requesting increases in credit card limits. Each time a request for increase is made, the creditor pulls a report, creating an inquiry. Too many inquiries in a short amount of time will have a negative impact on a credit score. A hard inquiry may occur when applying for an auto loan, student loan, business loan, credit card or mortgage. Multiple inquiries can communicate to lenders that an individual may desperate for credit or unable to qualify for a loan.
  • Keeping unwanted, unused savings accounts open. Don’t forget to officially close out an unwanted account.
  • Accounts in collections, bankruptcies, foreclosures and liens. These items are known as derogatory marks and will definitely lower your score.

Improving credit is not a black and white process; every person’s credit history differs. The good news is that credit scores CAN be raised through knowledge and diligent effort. Knowing what helps and hurts your credit will enable you to take steps today to improve your overall credit score.