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How to Improve Your Credit Score Before Buying a House

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How to Improve Your Credit Score Before Buying a House

13 August 2023
Posted On
jana@janacaudillteam.com
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Buying a home is one of the biggest investments a person can make in their lifetime. Finding your dream home involves more than making a wishlist of desired features: you need to get your finances in order. A good credit score is critical to getting a mortgage since lenders will want to know you will pay back the loan. If your credit score has room for improvement, you can take steps to improve it before applying for a home. The Jana Caudill Team offers detailed advice for making your home search a success. Below, we cover a few ways buyers can improve their credit scores before purchasing a house

Access Your Credit Report

The three main U.S. credit bureaus (Equifax, Experian and TransUnion) release credit scores and reports that provide a detailed look at how your score is calculated. Each of these scores should be about the same, even though they pull data differently. For instance, Experian focuses on timely rent payments, whereas TransUnion draws from in-depth information about previous employment. Access these records and obtain a copy to provide to lenders when applying for a mortgage. 

Determine Where You Stand

Simply put, the better your credit history is, the higher your score will be. This translates into better chances of obtaining a mortgage. In order to make a 3.5% down payment, The Federal Housing Administration will require you to have no less than a credit score of 580, while major lenders usually expect a minimum score of 620. If you don’t meet this threshold, there are ways for you to increase your score.

Erase One-Off Mistakes

Many people end up with a late payment at some point. Unfortunately, a single late payment can deter lenders from approving your mortgage since these late payments can stay on your record for up to 7 years. It’s possible to try and ask a credit company to remove the late payment from your report. This tactic may not be effective for someone with a long history of late payments, but may work for someone with a single, accidental late payment. 

Increase Your Credit Limit

Paying off your debt is the most straightforward way to boost your credit score. If that’s not currently an option, consider requesting a credit limit increase. A higher limit improves your credit-to-debt ratio. Owing a smaller amount of your available credit is better than high utilization. 

Make Sure You Pay On Time

If you tend to slack on payments, now is your chance to change. Improving your credit score is possible if you dedicate yourself to making payments on time. Automatic payments may be a great option to make sure you pay back what you borrowed. 

Be Patient

Late payments can have long-lasting impacts on your credit score. Fortunately, establishing good habits makes it possible to improve your score—and your odds of being approved for a mortgage. If you’re planning to move, start taking steps as soon as possible. Once your credit is headed down a better path, save for a down payment and begin searching for homes with The Jana Caudill Team. We’re ready to help you find your dream home: contact us for outstanding customer service. 

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