Thinking about buying a home, but not sure if you will qualify for a loan because of your credit score? Below are some tips that can help to increase your score.
Review your credit score
Your first step should be to check your credit score and your credit report. You can do this by visiting annualcreditreport.com. You can also check with the three credit unions( TransUnion, Equifax, & Experian), which are required to allow you to check your credit once a year for free. You want to make sure that everything is accurate report. Check for anything that should be removed but hasn’t been, such as old debts. Also check to make sure there are no fraudulent charges on your report.
Pay off as much of your credit card balances as you can
Looking for a quick way to boost your score? Having credit cards that are nearly maxed out will have a negative impact on your score. You can fix this by paying off as much of them as you can. Some people recommend that your credit card balance should be less than 50% of the max limit. Some say that is needs to be less than 25%. Bottom line: the lower the balance on your credit accounts, the better your score. However, it is highly recommended that you do not close any of your credit accounts, as this can negatively affect your score. Simply pay off as much debt as you can, and watch your score rise!
Do not make any big purchases that require a loan!
If you are looking to get a mortgage for a home, make sure you do not try to make another big purchase with a loan at the same time, such as a new car. This will have a negative effect on your score, as lenders will not be sure if you can handle such a huge increase in debt. Also, do not try to trick the mortgage company by getting a car loan after you have already been approved. Lenders will check your credit as late as a few days before closing to make sure this doesn’t happen, so it would be best to wait until everything closes and you are in possession of your new home!
Talk with a mortgage lender
Once you feel you are ready, visit a mortgage lender of your choice and see what options they can offer you. They will be able to let you know what they can give you based on your score, as well as steps you can take to improve your chances of qualifying. You can find a mortgage lender anywhere, from websites like guaranteed rate or from the place where you personally bank. If you have any questions, feel free to contact me!