Prepping your credit for a future purchase

A recent article on MarketWatch.com offers tips on preparing your credit score for next year’s real estate purchase, including:

- Check your credit report. Find out if there have been changes to your account limits, and make sure there aren't any errors. Look for any negatives on your report -- many negative items should be removed after seven or ten years.

- Don't get close to card limits. About 30% of your FICO is based on the ratio of the amount that is owed on active cards to your available credit. But utilization on individual cards is important too; getting close to the limit on one card will also reflect negatively on your score. Pay down balances as much as possible.

- Keep accounts active. Accounts get closed when there hasn't been activity on them for a while. Make small purchases on cards a couple of times a year -- then pay them off right away -- to keep accounts active and your available credit up.

- Pay bills on time. This should an easy one, but could prove challenging for people who could lose their jobs in the months ahead. Be proactive, and contact the credit-card company as soon as possible if you're having problems paying your bill. Payment history counts for about 35% of your credit score.

- Don't apply for new cards. Store cards are tempting when they offer discounts at the register, but don't bite. Applying for that card will have a negative effect on your score in the short term.

Read the full article on MarketWatch.com.

For more information on the Boston real estate market, go to Gibson Sotheby's International Realty, Boston's real estate experts.