6 Foolproof Ways to Improve Your Credit Score

Homebuyers have been flocking to the real estate market this summer. Historically low interest rates have encouraged many potential buyers to begin their home searches even in the midst of the pandemic. And while now is a great time to get a good deal on a home loan, lenders have become more strict in their qualification process. Having a good credit score is more important than ever, and can mean the difference between qualifying and not qualifying. If your score is on the low end, then here are six foolproof ways to improve your credit score before buying a home.

Remove errors from your credit report

First things first — order a copy of your credit report and check it for errors. It is not uncommon to find errors on your report, and it’s essential that you have them removed before you begin your house hunt. It can take several weeks or even months to have these errors removed, so begin this process as soon as possible.

Settle outstanding debts

Have any of your debts gone into collections? That could significantly impact your score. Now is the time to address them. If you are able to pay off the debt, call the collection agency and tell them you wish to pay off the debt and have it deleted from your report. Be sure to get a confirmation letter from the collection agency about the pay off and that the negative item will be removed from your report.

Pay down debt

Another way to improve your credit score quickly is to pay down balances on other debt like credit cards or auto loans. You should aim to have less than 30 percent of your available credit used.

Ask for higher limits

If you want to improve your credit utilization ratio (how much debt you have compared to your credit limits), then you can also ask your creditors to increase your credit limits. While this may seem counterintuitive, as if you’re asking for more debt, it can help to improve your score. Having a higher limit without actually using it means you’re lowering your utilization ratio.

Don’t take out any new loans

Now is not the time to take on new debt, like buying a car. Don’t be tempted to take out a new loan after you’ve been approved, but before you close on your mortgage. Your lender will be checking your credit throughout the loan process. You should wait to make any big purchases until after your loan has closed.

Don’t close accounts

It may be tempting to close unused accounts, but you should wait until after you’ve closed on your home loan. While closing accounts may or may not hurt your credit score, it is better to wait. Your credit score takes into account your credit history and the length of your credit. So closing an account can impact your score and cause your lender to be concerned.

Contact Agent inc. today

Understanding the real estate process can be intimidating, especially for first-time homebuyers. If you’re ready to buy a home, then contact the experts at Agent inc. at 949-791-8160 or [email protected]. We’re here to help you and answer all your questions every step of the way!