Buying a Home: Giving Your Credit the Boost You Need | Kathryn Smith
Alert: Coronavirus Disease (COVID-19) updates. Learn More.

Buying a Home: Giving Your Credit the Boost You Need

Making the decision to buy a home is one of the most exciting times of anyone's life! However, if you realize that a less than stellar credit score is holding you back, it leave you in a bit of a panic. Keep in mind that you are not alone. Most people have some sort of blemish on their credit report. In fact, the national average credit score is 695, with only half of consumers having a score of over 700. While you will still be able to secure a mortgage with this score, in general; the better your credit score, the better rates you will get on your loan. Don't despair, because there are ways to give your credit the boost that you need to buy your dream home at an attractive rate!

Make Sure All Bills Are Current

If you have bills that are past due, pay them as quickly as possible. Going from paying one or two bills late to paying everything on time for a few months is a great way to show creditors that you are responsible. As the most important factor in establishing good credit, getting all of your bills current is the first step in improvement.

Pay Down Balances

One of the best things you can do is to review all of your bills and pay down whatever you can. Credit utilization accounts for 30% of your score, so make sure you are not using all the available credit that you have. Pay down your lowest balances first, and then work on paying down the rest. This is one of the fastest ways to get into the "excellent" range!

Become an Authorized User

Perhaps you know someone who has excellent credit. See if this person would consider adding you as an authorized user on one of their credit cards. Their excellent payment history will reflect on your own history as well. This also helps give you an "established" credit history, which is another great way to raise your score!

Request a Copy of Your Credit Report and Dispute Errors

You are entitled to a free copy of your credit report every year, so make sure there is no inaccurate information being reported. It is very possible that there may be mistakes, and if so, it is extremely important that you dispute them. Most creditors allow consumers to dispute errors online, making the entire process quick and convenient.

Don't Close Old Accounts

While it may be tempting to close an old account that you never use, or to close an account so you don't use it, now is not the best time for that. Credit history is a key factor in determining scores, and closing accounts can actually be detrimental, as it hurts your credit history length. An important thing to remember is that if you have older accounts that you haven't used in a while, it may be a good idea to start making small purchases and paying them off each month, to avoid them being automatically closed by the company.

Avoid Opening New Accounts

Many people believe that if they open a new account and pay it in full each month, they can improve their credit score. The opposite is actually true, as this is a way to hurt your score! The reason is, whenever a new account is opened, an inquiry is reported, and too many inquiries can be harmful.

Improving your credit score to buy a home shouldn't be difficult if you know the necessary steps to take, and your Equity Prime Mortgage Loan Originator can help you find the right loan program for your needs.

For more helpful information on making your home buying dream a reality, click here to contact us  today or call our toll-free line at (877) 255-3554!