7 Steps to Boost Your Credit to Buy a Home

If you’re looking to buy a home, it’s time to check that dreaded credit score! While to us our credit score doesn’t mean too much, to a lender who’s considering whether to approve your mortgage loan, a low credit score can indicate you’re a risky borrower. And for most of them, that’s not a risk they’re willing to take. 

So, what do you do to get your credit score up and get ready for your home purchase? Let us help with these tips. 

1. Get a current copy of your credit report

Knowing is half the battle when it comes to your credit. If you know where you stand, then you know exactly how much work it’s going to take to make that good credit score happen for you. You're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.

2. Pay your bills on time

This seems like a no-brainer, but it’s important to note how big of a deal it is to keep your payments current. Every time you miss it dings your credit score, so in order to be in a good place to buy a home, you need to be making those payments on time every time. 

3. Resolve any errors on your credit report

According to forbes.com, every year 25% of people who get declined for a mortgage had errors in their credit report. This is another reason it’s so important to get a current copy of your credit report and study that for any inaccuracies. If you find something amiss, follow the instructions from the Federal Trade Commission here on how to get those resolved. 

4. Pay more than minimum credit card payments

A history of minimum-only payments isn’t a good sign for someone looking into your credit. Try to always pay over the minimum on your credit card payments to show that you are capable of paying down debt. Also, try to keep your balances low. High credit card balances don’t bode well for a good credit score. But by paying down your debt, it’s a win win for you!

5. Stay away from big financial changes 

If you’re looking to purchase a home, this is not the time to make drastic changes to your finances or put a large purchase on your credit card. This includes buying a new car, charging that summer vacation, etc. Even if you’re on your way to being approved for a home loan, big changes like this can dent your credit score and can totally alter the course of your mortgage loan approval. Don’t risk it and wait to make that move until after you buy. 

6. Don’t cut cards/move debt

Rather than closing off paid accounts, just keep them for now until your home buying process is complete. The same goes for moving debt to another company. Just be diligent about paying off the cards you currently have and then when you do, just keep them for the time being to be safe. 

7. Start early and be patient 

There’s no quick fix for amping up your credit score. Companies are looking for a history of good behavior, and to create that history will take time if you are a serial late bill payer. Don’t expect to change your ways and see improvement in your credit score immediately. It could take weeks or months to make it happen.