4 Steps to Improve Your Credit Score Before Buying a Home

When it comes to buying a home and securing a mortgage, bad credit can make it difficult to get a decent interest rate, which results in higher costs for you. Fortunately, there are some steps you can take to increase your credit score before applying for a mortgage. Improving your credit score by even 50 points can lead to significant savings in the long run. Read on for 4 simple steps to improve your credit standing.

Improving Your Credit

If your credit score is too low, you may not be able to qualify for a mortgage in the first place. Most mortgage lenders have a minimum that borrowers must meet to work with them, so borrowers with below-average credit stand to gain the most by improving their scores. Even good credit scores can stand to save thousands of dollars by taking these steps to improve their credit scores. Increasing your score helps you qualify for a mortgage and improve your mortgage rate.

Step 1: Dispute any errors on your credit report.

Get a copy of your credit report and scan it for inaccurate information such as duplicate credit accounts or identity errors like misspelled names. Duplicate credit accounts can make it appear as though you have more debt than you really do, which can all impact your overall credit score. You can dispute information like this by contacting the credit bureau in writing to outline any errors.

Step 2: Add your phone and utility bills to your credit report.

Different programs are available that enable you to add payment history from phone and utility bills to your credit report. If you don’t have much history and want to build credit quickly, this is one way to raise your score.

Step 3: Avoid late payments.

Your payment history is one of the biggest contributors to your credit score. Consider setting up automatic payments for credit card bills to avoid late payments, which can significantly reduce your credit.

Step 4: Keep your credit utilization ratio low.

Another big player in your credit score is credit usage. It’s recommended to keep the amount of credit used at 30% of your total credit line. So if your credit line is $1,000, try to keep your credit utilization at $300 or less. 

Credit Scores Matter

As you know, credit scores affect your mortgage rate. Lenders look for several personal financial factors when determining a borrower’s qualification. Protecting your credit can help prevent identity theft, but when it comes to quickly raising your credit score in preparation for the home buying process, there are actionable steps you can take to save yourself some money in the long run.

The Best Step You Can Take

We understand that buying a home can be stressful, but with the help of your team at Chris Doering Mortgage, we simplify the process for you, helping guide you each step of the way with our professional knowledge and expertise. Whether you are buying your first home or a vacation home, you should be well informed about the impacts of your credit score on the process as well as ways to improve credit before applying. Contact us today to get started.