Your credit score is one of the most important numbers you'll need to consider when buying a home. It is one of the key factors lenders look at when deciding whether or not to lend to you. Don't get hung up on the very specific number, but do spend the time working to improve this number as much as possible. Even just a few ticks upward can help you to see a better interest rate and loan availability than you would have had. The following tips can help you to make that possible.
- Get a copy of your credit report. Check it over. Ensure it is accurate and remove any outdated negative information. Never close an old credit account, though, as this can negatively impact your score.
- Pay down your debt. Don't add to those credit cards right now. Pay down your credit card debt as much as possible in the months leading up to the purchase of a home. Lowering your credit to income ratio is important.
- Don't open new lines of credit unless you need to further establish a score. If you don't have credit, open a new credit line to ensure that you can work to improve your score. On the other hand, if you already have credit, keep new lines of credit to a minimum.
- Beware of those furniture purchases. Sometimes, homebuyers get approved for a loan, find their home, and then begin opening lines of credit to purchase furniture for the new space. A final credit check during the closing process can be negatively impacted in this case.
- Pay off judgments or collection accounts now. These can lead to a rejection for a potential lender.
- Don't get numerous loan quotes. In some cases, a hard inquiry from a mortgage lender, followed by another and another, is going to make you look desperate. Avoid doing this to protect your credit score.
Most importantly, work with a qualified mortgage specialist to ensure that you are always getting the best loan for your needs. He or she can often give you tips to boosting that score or to improving your credit outlook so you can qualify for a better loan. This can help you to get into the home you want with an affordable monthly payment. Don't overlook the value of making a budget and sticking with it so you can drop your credit card balances!
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