One of the most important steps before buying a house is to improve your credit score. Credit scores are a summary of your credit report, which demonstrates how well you have paid off debts.
Lenders will look over your credit score to come up with how much credit you will be granted for a home loan. High credit scores usually mean you are more trustworthy from the eyes of the lender. This means you will most likely secure a better mortgage. Lower scores mean that you might not get a mortgage or need to pay a big premium.
There are a few things you can do to boost your credit score if you are going through the home buying process. Read on to learn about how to improve a credit score before buying a home.
Check For Any Errors: One of the easiest steps towards improving a credit score is just looking over everything to check for errors. A large number of Americans actually have errors on their credit file, which can affect their credit score.
Sometimes, creditors make errors when reporting, and these accidents can negatively affect you. Be sure to do free credit checks and study the results to identify any errors. If you do find something, reach out to the credit bureaus so they can waive this. This will lead to a better score.
Pay Off Your Debt: Paying off your debt is a sure-fire way to improve your credit score. The more credit you have available for a lender to review, the better. Work and save to pay off as much debt as possible, while keeping a low credit utilization. This means you are using a small fraction of the available credit, which looks good in the eyes of lenders. Reach out to your credit lenders to see when they report so you know when to pay balances.
Open A New Account: Opening a new credit card account can be a sneaky way to improve a score. The boost in your overall credit card line should help your utilization and will give lenders peace of mind in knowing that you can handle different types of credit accounts. This can go a long way towards securing a better home mortgage.
Get A Secured Card Or Loan: Those who are having trouble opening a new credit card should try to get a secured one. The addition of a deposit means that the risk for the lender is lower. This can be a safe way for you to build credit, even if you do not have a good or long credit history.
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Pay All of Your Bills On Time: Aside from paying off any credit card debt, you should definitely pay off any interest or credit bills before trying to get a mortgage. Paying off late payments gives your credit score a boost since paying on-time is the biggest factor in coming up with a credit score. No matter the steps you take to improve your credit, be sure to carry them out early.
Most changes might not be reflected on your credit card statement for a couple of months, especially if you are trying to lower your credit utilization. Coming up with a plan to improve your credit score means you will be able to present your best case to the lender when it comes time to buy a home. Every factor that works in your favor can go a long way to getting a good deal on a mortgage and will save you a lot of money in the long run.
Do you have a question about boosting your credit score to buy a home? Click here to contact Lending Corner today!
Courtesy of Cuselleration