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10 Ways to Boost Your Credit Score Before Buying a House

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Buying a house or a condo is one of the most significant financial investments you will undertake in your life. If you want to purchase a home via a mortgage, your credit score has got to be impeccable. Call your banker and find out what credit score is needed to buy a house, and then use the tips given below to ensure your score meets the required threshold.

  1. Check Your Credit Reports
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Under the FACT Act, you are entitled to a free credit report from each of the nation’s three credit reference bureaus. Getting this report is the first step in ensuring that you are aware of any problems in your credit score that need your immediate attention.

  1. Pay Over the Minimum
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Strive to pay over the minimum amount required for your credit cards. The advantages of this strategy are that it chips away at the balances, lowers the interest payment you make to the bank, and is a positive indicator of your creditworthiness for anyone reviewing your credit score.

  1. Maintaining Low Card Limits
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Ensure that the balance owed on each credit card never exceeds 50% of the limit of that card. This is considered a positive during a credit appraisal.

  1. Pay Bills on Time
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Never fall back on the payment of your bills. One metric that is used to gauge your creditworthiness is your consistency in paying bills on time. This is a habit that will help your case once you’re ready to apply for a mortgage.

  1. Do not Close Accounts
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There is a debate on whether it’s wise to close paid off accounts. It makes sense to pay off credit card debts, but do not shut any of them down before applying for a mortgage. The reason is that open accounts give a clear history of your financial history and ensure that a better judgment of your creditworthiness can be made.

  1. Avoid Swapping Debt
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Consolidating debt by moving debt from one credit card to another attracts hefty interest payments. This is a red flag to any entity assessing your creditworthiness. If you want to improve your creditworthiness, avoid debt swapping.

  1. Avoid Major Purchases
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You would do well to avoid significant investments before applying for a mortgage. This is especially if they’re financed through a loan. Acquisitions such as buying automobiles or financing a holiday can alter your financial profile. This could work against you since banks will get suspicious of your financial stability.

  1. Maintain A Mix Of ‘Good’ And ‘Bad’ Loans
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An example of a good loan is a business loan or a home loan. A bad loan is usually personal loans, and credit. Your profile looks impressive if your good loans outweigh your bad loans.

  1. Give Yourself Time
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Making changes to your credit score might take considerably more time than you anticipate. This means that you need to begin planning and correcting any errors on your report way before you apply for a mortgage.

  1. Dispute Inaccuracies
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It is possible for misinformation to hurt your credit score. Make sure to review your credit report and point out any inaccurate 9informatoion by writing to the credit bureau. Attach any evidence you might have in order to get the mistake expunged from your report.

 

 

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