How Should I Improve My Credit Score Before I Buy a Home?

Houses are selling extremely quickly in 2021. This is due to historically low interest rates as well as few houses being available for purchase. But if you’re ready to buy a home yourself, you’ll need to ensure that you maintain a high credit score, or else lenders may see you as a liability, preventing you from receiving a favorable interest rate.

For this reason, we have compiled the best tips for improving your credit score so that you can start the process of purchasing your home. Also, once you maximize your credit score and you are ready to start looking for your house, a qualified mortgage professional can help you navigate the competitive homebuying field.

Fix Mistakes on Your Credit Report

Mistakes happen a lot when it comes to your credit report. After all, we’re all human! Luckily, errors on your credit report are fairly easy to correct.

All that is required to address this issue is that you visit the websites of the three main credit bureaus (Experian, TransUnion, and Equifax) and check your information. If anything is incorrect, each website has explicit instructions for how to go about correcting the issues. But don’t wait! This whole process can take 30 days or longer to complete. So, do this well before you start searching for your new home.

Don’t Make Late Payments

Paying bills late can negatively affect your credit score. Therefore, doing everything you can to ensure that you never make a late payment goes a long way in improving your credit report. If you find yourself frequently missing payments or making payments late, you may consider implementing one of the following two techniques:

  1. Use a calendar to track your bills. Whether you prefer a pen and paper calendar or the one on your mobile device, make sure you have some visual reminder of when your bills are due. Using calendar alerts on a smart phone makes things extremely easy, as you receive a notification every time a bill is due.
  2. Set-up auto-pay. Even easier than calendar reminders, auto-pay essentially enables you to not even have to think about your bills. With auto-pay enabled, which almost every service and account offers these days, you simply link a card or payment account to your recurring bills and once a month, money is deducted from your account. You then receive a notification through mail or email and the process is complete.

Keep Credit Card Spending to a Minimum

Not opening new credit cards and limiting credit card spending are critically important steps as you get closer to the time when you will start the homebuying process. Lenders do not want to see a reliance on credit. Rather, they are much more comfortable giving out favorable loans to homebuyers who utilize other methods of payment when possible. Therefore, if you see a tempting credit card offer, resist the urge and remind yourself that you can always find good offers later on, after you’ve purchased your home.

Final Thoughts

If you’re ready to buy your new home, you should consider all of the points addressed in this article and consult with an experienced mortgage professional like the ones at Rex Homes. Before you know it, you’ll be moved into your dream home!

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