Tips To Improve Your Credit Score So You Can Be A Homeowner
It is a new year and one of your resolutions for the upcoming year may be to purchase a new home. Purchasing a home is probably the most important financial investment you will make, but many people may feel that being a homeowner can be out of their reach because of one number: their credit score. In order to be a homeowner your credit score has to be good in order for any lender to give you a home loan but luckily there is hope. By reading and acting on these tips to improve your credit score, home ownership can be within reach by year’s end.
Know Your Number
The first tip to improve your credit score is to know what your credit score is to begin with. So how do you get your credit score? You are allowed an annual free credit report from the major credit report agencies (Equifax, Experian, and TransUnion). It is important once you get your credit report to check that all information is accurate and there are no red flags of identity theft or misinformation.
Pay Your Bills On Time Every Time
The biggest boost you can give to your credit score is to pay your bills on time. Make a monthly budget and if it is hard to keep track of when to pay your bills, make sure to adapt some type of organizational system to keep you on top of paying those monthly bills. If you are struggling with paying all your bills, look into finding extra money with a part-time job, or selling some household items that you no longer need.
Keep Credit Card Debt Low
Take stock of how much credit card debt you have versus the credit limit that is still available to charge on. This ratio is important in determining your credit score and something that lenders look at when considering giving you a home loan. Abby Hayes, contributor for usnews.com, writes that “…your debt-to-credit ratio…makes up about 30 percent of your overall credit score.” With that big of a percentage factoring into the number that will determine if lenders give you that home loan, it is vital that paying off credit card debt and keeping that debt down to ensure a higher credit score.
By getting your credit report, taking the steps to pay your bills on time each month, and keeping the balances low on those credit cards, your credit score will improve at a fairly steady pace. Within months of learning what you should know about repairing your credit you will see your credit score get higher, and lenders more willing to work with you on getting a home loan.