Your credit score is one of the most important factors considered by lenders when you apply for a mortgage. This score is calculated based on your likelihood of you paying off your loans and settling your debts.
If you are considering buying a home, but your credit score is lower than it should be, consult the following list of tips to improve your score before you start the homebuying process.
Correct Mistakes on Your Credit Report
Like it or not: mistakes happen. Mistakes on your credit report can significantly affect your credit score. Luckily, correcting these mistakes is a fairly easy process. All you have to do to correct errors such as duplicate information or accounts is to follow the specific process for addressing these errors on each of the three main credit bureau websites. The three bureaus in question are Experian, TransUnion, and Equifax.
These changes can take some time to go into effect, so ensure that you start this process long before you begin shopping for homes.
Keep Credit Spending to a Minimum
When possible, you’ll want to limit your credit card spending while you are going through the homebuying process. Paying in cash and frequently paying off credit card balances are good ways to show lenders that you are a responsible applicant. Borrowers who maintain high credit card balances and don’t make credit payments on time are generally seen as liabilities in the eyes of lenders.
Be Timely with Bill Payments
Whatever you have to do to remind yourself: make sure you pay your bills on time. You can use calendars, sticky notes, automatic payments, or any other method that works for you; just don’t miss bill payments whatever you do.
This is one of the biggest factors that can result in a low credit score and by extension, a worse loan offer. Worse yet, if your late payments find their way into debt collection, this information will affect your credit score for as long as 7 years.
Don’t let this happen to you. Make your payments on time any way you can.
Work with an Experienced Mortgage Professional
All of this advice can be overwhelming for the homebuyer. It’s completely understandable that you may feel demoralized by the homebuying process and think that you’ll never be able to improve your credit score and purchase your home with a good mortgage rate.
Fortunately, there are many mortgage professionals, like the ones at Rex Homes, who can help you every step of the way. These experts in the mortgage field know the ins and outs of the homebuying process and they can answer any question you may have.
Buying a home is an exciting process. However, many things can make the homebuying process stressful such as trying to improve your credit score. But if you take the time, talk to mortgage experts, and make sure you are following all of the necessary steps; slowly but surely you can improve your credit score.
Not long after that, you’ll be able to receive a good mortgage offer, purchase your new home, and rest easy knowing that you did everything you could to get into the home of your dreams.