Having great credit isn’t the only way you can buy a house. However, it does make the entire process relatively painless. Plus, with a great credit score, you’re more likely to enjoy lower interest rates and better terms.
So, before you apply for a mortgage, it’s best to take stock of your credit rating, and then take steps to improve it if it’s less than stellar. Boosting your credit score doesn’t have to be a long-winded process either; you can easily raise your credit score in just a matter of weeks. Here’s how.
Check for errors and address them.
It’s been found that one in five consumers is likely to encounter errors in their credit report. If your credit rating isn’t up to par, start the process of improving it by taking a close look at your credit report. Familiarize yourself with common credit report errors as you go over yours.
If you do find inaccuracies in your credit report, it can be a simple matter of disputing credit errors with the appropriate credit bureau. They will investigate your claim and make the requisite amendments as appropriate. And because you can get a free copy of your credit report annually, this is a step that won’t hurt, especially if a mistake is found in your favor.
Take control of your financial obligations.
Of course, even if your less-than-ideal credit report is telling a true story, the situation is far from hopeless. In most cases, a low credit score is linked to how much debt you have. Moreover, your debt-to-income ratio is a huge consideration for most lenders, so what you already owe can, in fact, make or break your mortgage qualification.
The most surefire way to fix this is to pay off your credit card and other debt. Doing so improves your credit utilization, which makes up a huge percentage of how your credit score is calculated. At the most fundamental level, aim for a credit utilization rate of 30 percent as this is the sweet spot for a higher credit score—that is to say, a total balance of no more than $3,000 from an available credit of $10,000, for instance.
Another great way to take control of your credit rating is by improving your payment history. This is actually the most important credit score component, which you can address by simply paying your bills on time.
Explore other financing options.
As mentioned earlier, a good credit score isn’t the single most important requirement when it comes to getting a mortgage, so don’t beat yourself up if your score falls short. There are some great financing options to explore if your credit score doesn’t fall in the “Good” range if you’re buying a house for the first time and haven’t built up enough credit, or even if your down payment won’t be 20%. FHA loans, in particular, can be a great choice in these instances, and an FHA application opens the door to more flexibility and broader requirements than a conventional loan.
It’s worth noting that an expert realtor will not only help you find your dream home, but they can also provide guidance on mortgage rates and other such financing concerns. And if you’re entering the home buying process as a novice, expert real estate agent Jennifer Cloud will be a true blessing.
So we know a bad credit score isn’t ideal, but making improvements isn’t insurmountable. While it’s never too late to improve your credit report, you don’t have to shelve your home-buying efforts in the process. Good luck!
Credit to – Suzie Wilson | Happier Home