Having good credit simplifies the process of applying for a home loan significantly, so if you are considering purchasing a home, now is a good time to do what you can to ensure that your credit is in as strong of standing as it can be when you apply for a home loan. Boosting your credit isn’t always easy, but there are simple techniques that you can use. Here is a look at some simple ways that you can boost your credit before buying a home.
Get your credit score.
Of course, the first step to improving your credit score is to assess your starting point. Under the FACT Act, you are entitled to a free credit report once every 12 months from each of the three credit bureaus—Equifax, Experian, and TransUnion. To retrieve your credit report, simply visit the Annual Credit Report website and request a free report. You can also request a report by phone or by mail.
Correct any errors.
Did you know that as many as 25% of people who get declined for a mortgage had an error in their credit report? If you notice a mistake in your credit report, it’s highly important to tell the credit reporting company in writing what you think is inaccurate. To effectively dispute an error, you’ll need to include copies of documents that support your position. The Annual Credit Report website contains more detailed step-by-step instructions on how to dispute an error. If done correctly, you should receive a response from the credit reporting company within thirty to sixty days.
Pay all of your bills on time.
This is much easier said than done, and it may sound like common sense, but staying current with all of your bills is truly one of the best and most straightforward ways to keep your credit score up.
Pay more than the minimum on your revolving credit.
Ideally, you’ll be paying your credit card bill in full every month. Some people, however, make it a habit to pay only the minimum payment each month. A history of minimum payments never looks promising to someone who is reviewing your credit report, so do your best to avoid paying only the minimum required amount each month.
Avoid major changes to your finances.
As you are planning for a home purchase, it’s a good idea to avoid making any major changes to your finances in the coming months. This means not buying a car or charging an expensive vacation on your credit card.
Don’t cut cards.
Let’s say you have three credit cards, and on the one you use the least frequently you have completely paid off the balance. Rather than closing this account, leave the account open prior to applying for your mortgage, and use this card every so often to keep the tradeline active.