How to Help Boost Your Credit Score
Before you hit the pavement looking for homes to buy you need to make sure that your finances and credit are in order. That means taking the time to sit down and getting a good look at where you stand, as well as understanding what you need to do before you apply for a mortgage. Here are a few tips to help you set your credit score straight and move on to buying a home.
Go Through Your Credit Reports
Get a copy of your credit report from all three agencies (Experian, Equifax, and TransUnion). Review each report thoroughly to check for any errors or inaccuracies that need your immediate attention. If you don’t correct mistakes quickly it could mean that you won’t be approved for a mortgage. Each of the credit reporting agencies have step-by-step guides on their websites explaining how to file a claim to correct any errors.
Pay Your Bills
It is common sense that you should be paying your bills on time, but did you ever think to pay above the minimum amount due in order to boost your credit? A history of on-time payments looks good, but on-time payments of more than the minimum can give you a more favorable image to banks. Plus, you’ll be lowering your balance and saving on interest paid. You should also try to only carry a balance that is 50% more than your limit on each card; pay your debts down to below that halfway mark as soon as you can.
Resolve Your Debt, Don’t Move it
Your goal should be to clear up any debt that may be out there, not just move it to another credit card. Moving the debt not only means it will take longer to pay it off, but credit card companies have picked up on this practice and charge large fees to move the debt around. It’s not worth the extra time and costs when you can keep it on one card and work to pay it off.
Avoid Large Purchases
One last piece of advice that will help you get your finances in order is to avoid making large purchases until after you are approved for your mortgage. You shouldn’t go on any extravagant vacations or buy a new car with you credit card prior to getting your approval. You don’t want to harm your credit or look financially irresponsible to the bank.
The bottom line is that you should make sure that your credit and finances are in order before you start looking at homes and before you apply for a mortgage. The last thing you want is to find the home of your dreams and get denied at the mortgage process because of an error that could have been caught early on. Know that making your credit right will take time and work on your part, but if you keep in mind that most errors can be corrected by changing a few habits you’ll be on the way to mortgage approval and a home you love.