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Lately I have been talking about how we want to buy a new house a lot. I think about it everyday and I find myself looking at houses everyday also. I’ve pretty much looked at all of the houses within a 60 mile radius of where I want to be.

I have seen a lot of houses that I like, but none that are perfect. I have literally browsed through thousands of houses. Right now I feel like I’m at the point that if I find a house that I absolutely love, I don’t know if I can wait until the end of 2013 or the beginning of 2014 to buy it. I mean, how could I wait? I haven’t found the perfect one yet so I definitely do not want to let the perfect house escape from me.

There are many things that we need to do before we buy, but we especially want to make sure that our credit scores are as perfect as they can be. Right now we are in the mid 700s and it would be higher if we wouldn’t have taken out a couple of 0% loans (we took them out just because they were 0%, we just let the cash sit in our bank because we believe that’s a better gain).

So, since we are focused on increasing our credit score and we plan on buying once the perfect house comes along, we need to really buckle down and make our credit score as good as it can be so that we can be ready to officially start the home buying process. Every little thing helps and even a couple of points higher would make us very happy.

How to quickly increase your credit score:

1. Check and fix any errors in your credit report.

When was the last time that you checked your credit report? You should do this at least once a year and make sure that there are no errors and that all of the information listed is correct. A small error might be drastically affecting your credit score, so check now! I recently ordered both of our credit reports from the 3 major agencies (all for free of course) and found that everything is correct now.

Everything being correct on our credit reports is a big deal because a couple of years ago I found out that someone had bought a house under my name when I was only 13! I had just found out about it because it was buried in my credit report and I had never looked hard enough. Definitely a big mistake.

2. Watch your utilization rate.

Pay down those high balances that you have. The balances that you have on your credit cards account for approximately 30% of your credit score. You want your balance to be below 30% of your total available credit. So if you are allowed to put up to $1,000 on your credit card, do not charge more than $300. It is also said to try and keep this amount below 20% in order to have an even better credit score.

This is something that we are really working on. I recently paid off a ton of credit card balances. We never carry a balance over and we always pay it off completely, but even with that, if you do not keep your utilization rate below 30%, it can still hurt your score even if you are paying your FULL balance off every month.

3. Keep all accounts open.

Recently my fiancé, “W,” was fooled into opened up a store credit card in order to save $25 off of his purchase.

Yes, I said $25 and that was all it took to entice him to sign up.  Trust me, he will never do that again! I thought about closing it immediately but I do know that closing it will only hurt his credit score and our ability to get a great interest rate on a mortgage. So, for now, we just plan on keeping it open and using it occasionally just so that it will help our credit score.

Closing a brand new credit card so quickly will most likely not have a positive effect on our credit score.

Are you trying to increase your credit score? What tips do you have?

Credit cards can be a good thing, or they can be very bad for a person. If you’re looking to build your credit score, then you probably look forward to doing well with your credit card.  However, if you find that you have many spending temptations, then credit cards are probably not the best thing in your life.

I personally have 3 credit cards. I pay them off every month (I’ve never carried a balance) and I use them mainly for credit card rewards. I earn a decent amount and right now I have around $200 in credit card reward points saved up for Christmas presents that I plan on buying.

Most of my friends have no credit cards. When I tell them that I have 3, they usually think I’m crazy and that I must be in major debt. There is a correct way to use a credit card! Anyways, how do you know whether you should have any credit cards though? Maybe you should even close one?

A lot of people have credit cards for many different reasons. The cash flow from month to month is nice to have, the credit card rewards can add up nicely, and you can build your credit. However, many people are scared to close their credit card because they are afraid that they will destroy their credit score.

Your credit score is important in certain situations, but if you don’t know how to properly manage your credit card or credit cards, then closing them might be a better idea for the moment for you.

Reasons why you might want to close your credit card:

1. You can’t control yourself.

Do you see your credit card as free money? The other day my friend told me how she only had a $400 limit on her credit card, BUT that she could still go out to eat because she still had around $50 left to use on it. This makes no sense of me! She also said that she’s only been paying the minimum payment since she’s gotten it because she thought that was helping her credit score.

If you see yourself going to mall just because you have credit left on your card to use, then credit cards may not be good for you. Credit on your credit card is not something that you should just be spending and racking up just because it is there and available for you.

2. You don’t want to rely on credit.

One of my friends pays for everything with cash and refuses to have credit cards. While I wish I could say that this is the way that I live, some people actually DO (of course) pay for everything with cash so that they aren’t forced to rely on money that they don’t actually have.

Be Careful.

There are things to keep in mind if you do decide to close your credit cards. The effect of closing a credit card on your credit score can vary greatly. It all depends on your credit score now, how long you’ve had the specific card and your credit limits.

Maybe just hiding your card from yourself is a better idea, so that you can keep that long standing card that you’ve had. Freezing your credit card (such as putting it in ice in your freezer) may not be a good idea because the credit card company may close your account because of inactivity.

Also, if you close an account that had a high limit, this can affect your utilization ratio. If your ratio becomes too high, then this will negatively affect your credit.

Have you ever closed a credit card? Why?