Having a strong credit score is a crucial part of the home-buying process. Lenders are being cautious about their lending practices, and those with a low credit score may find themselves struggling to obtain a home loan.
Your credit score is comprised of approximately:
When you start to think about improving your credit score, make sure you know all three scores; you can obtain them from Experian, TransUnion, and Equifax. These three are the major companies that compile your credit history, basically repositories of financial information. They each calculate your credit score a little differently, so your score can vary; be sure to check all three for inaccuracies. A small improvement in your credit score could save you thousands of dollars a year on your loan.
It’s not easy, but pay down balances! And ignore grace periods; always pay your bills on time. Faithfully paying on time and in substantial amounts can cause a jump in your credit score in just a few months.
Keep all cards open, too. Lenders will look at the credit you have available versus what you owe; if you close a card that is paid off, you cut down your available credit amount. Don’t open a new card just to have more available credit, either; you want to show that you’ve had and paid off cards over a long period of time.
Have more questions about bumping up your credit score? Visit us at the housing fair and we’ll discuss the best ways to polish your score and get the best loan available.
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