18 May Need a mortgage? Improve your credit

Q. I am 41 years old and I am trying to clean up my credit to purchase a home in 12 months. The home will be for me, my five children, my husband (who has poor credit), and my mom (who has excellent credit). My credit isn’t good, and I’m trying to find a credit card to help me build my credit score. What can I do?
— Trying

A. It’s great that you are focused on improving your credit score.

As your score improves, the likelihood of buying a home will improve, too.

Raising your score will take patience and discipline, but it is certainly possible, said Cynthia Aiken, a certified financial planner with RegentAtlantic in Morristown.

The first thing to do is review your credit report so you know where you stand, Aiken said.

Ask yourself: What areas do you need to improve? Late payments, amount of debt, new accounts, too many credit applications?

Next move to the debt you already have, and reduce it.

“Using your credit report, list your accounts, amount owed and interest rate,” Aiken said. “Pay off those with the highest interest rate first.”

Then, pay close attention to how you’re using credit today. Pay your bills on time and keep balances low on your credit cards. If you have missed payments, then get current and stay current, Aiken said.

Be sure to manage credit cards responsibly.

“Don’t open new credit cards just to increase your available credit,” she said. “Apply for and open credit cards as needed and carefully make all payments on time.”

Also, don’t close unused credit cards to raise your score as the length of credit history is important, she said.

She said you’re better off paying off debt rather than moving it to another card.

Next, look to your regular monthly payments. Put your auto, student or installment loans on automatic payments so they are not late and may qualify for lower interest rates, Aiken said.

You said your mom has strong credit. If she does, ask if she will add you as an authorized user. You can be added to her cards without giving you access to use them, she said. This will be a positive for your report.

If you can’t find a credit card, consider opening a secured credit card by making a deposit into a checking account, Aiken said.

“The deposit secures the line of credit the bank or lender is extending to you,” she said. “Even with bad credit you can get a secure credit card. Start with $1,000 and pay off the entire balance monthly.”

As time goes on, Aiken said, you should request and check your credit report occasionally to confirm that you are on track.

“Because your goal is to purchase a home, meet with a loan officer and ask for a list of action items to help you improve your credit score and qualify for a loan,” she said. “Together you can create a schedule for accomplishing the action items. You may be surprised how quickly your score will improve.”

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