Want to save money on your home purchase? Great credit can help you do it.
Higher credit scores qualify you for better mortgage rates, which mean lower monthly payments and less interest paid for the next five, 10, 20 maybe even 30 years of your life!
But achieving a good score takes time – and improving a bad one doesn’t happen in a day. Do you want to give your score a boost before buying a home is on your radar? Then start now with these simple tips:
Settle up late payments.
If you’re late on any bills, settle those debts ASAP – especially if they’ve gone into collection. These can hurt your credit score immensely, as well as your ability to buy a home. If you have trouble remembering to pay on time, consider auto-payment options or set yourself an alarm a few days before each bill is due.
Pay down your high-interest debts.
The fewer debts you have, the better your credit will be. But since you likely can’t pay all your debts off immediately, focus on the higher-interest ones first, as these are costing you the most in the long-term. Once you’ve knocked the high-interest ones off your list (like credit cards, for example), work on paying off the lower-interest ones, like student loans.
Avoid new accounts, loans and big purchases.
Opening a new credit card or taking out a new loan will both require a credit check, which will impact your credit score and potentially your chance to buy a house. Avoiding starting any new lines of credit when trying to improve your score, and steer clear of any big-ticket purchases as well. These can be a red flag to mortgage companies.
Keep your old accounts open.
The length of your credit history plays a big role in your score, so even once you’ve paid a card or account off, keep it open, as it can show you’re financially responsible and willing to pay. Once you close the account out, it will no longer give your score the boost you’re looking for.
Double-check your credit report.
Credit reporting agencies make mistakes, too, so go ahead and run your credit report to make sure everything looks accurate. If something is off or you don’t recognize an account that’s listed, contact the agency ASAP to get it fixed. You could be a victim of identity fraud.
Checking your credit also gives you a better idea of what you should improve in order to boost your score. Are there lots of late payments? High balances? Collections notices? Focus on the biggest issues first, and then work your way down.
Set Yourself Up for a Smooth Homebuying Process
Want a smooth, affordable homebuying process? Then tend to your credit first – before you begin the search for a home. And once you’re ready, give The Claus Team a call. We’ll help you find the property that’s right for your needs, preferences and budget. Contact us today to learn more!
cover photo (c) experian.co.uk