No Comments

Buying that first Home? 5 Tips to Improve Your Credit Score!

If you are looking to buy a home, you may be more interested in your credit score than ever before.  The difference between a good credit score and a mediocre credit score could be the difference in being approved a home loan or not – and your score certainly might affect your home loan interest rate.

Lenders first analyze your credit scores to determine whether or not to consider you for a loan. If your score is above the minimum threshold that particular lender has set for home loan approval, then they consider various aspects of your credit history, your income, and your debt to monthly expense ratio. This is to be reasonably certain that they will not lose money by choosing to lend. If all looks good they will approve you for a loan at a specific interest rate. Next stop: Find that dream home!

Here are 5 tips to help get you on the road not only to loan approval, but also to a loan at a better rate – potentially saving you thousands over the lifetime of your loan.  You not only want to demonstrate that a loan with you is a good investment, but that it is a great investment. Successfully achieving this saves you time and money!

While improving your credit score sometimes takes financial behavior changes consistently over time, here are 5 quick tips to help make an immediate impact:

Quick Fixes – 5 Things to do Right Away

  1. Check your Credit Report – You need to know what you are up against in order to strategize how to improve your credit. Request a free copy of your credit report. You can get one free per year from all 3 of the major credit reporting agencies under the Fair Credit Reporting Act. Take advantage of this. Requesting and
    checking your own credit score will not affect your score as long as you order it directly from the credit reporting agency.
  2. Dispute Any Errors – Mistakes happen within the credit bureaus. If you find erroneous information in your credit report, formerly protest this to the each of the credit bureaus that has the incorrect information. Don’t be penalized for mistakes that aren’t yours! You can dispute errors online through Equifax, Experian and TransUnion.
  3. Pay Down Debt – keep your credit card balances low. A high debt to credit ratio will drive your credit scores
    down. Make sure that you are using less than 30% of your available credit at the most. Ideally use 10% in order to maximize your credit score.
  4. Negotiate Late Payments – Mistakes happen! It is understandable that you missed a payment here and there. If you have been historically good about making  payments, and just missed a couple here and there, ask for a “good-will adjustment.” Write a letter to Visa emphasizing that you’re a good customer, and ask for the mistake to be erased from your credit.
  5. Set up payment reminders- Use the tools available to you! Some banks have texting or email programs that you can sign up for to make sure that you do not miss a payment. If not, use a calendar and make sure that you have scheduled the dates of your payments to be feasible with your pay period and bill cycle. Late payments look particularly poor on your credit report.

Now you’re getting started! Talk to your financial advisor about more tips to increase your creditworthiness – and be well on your way to purchasing the home of your dreams!