When you are ready to start the home buying process, the first thing you need to do is check your credit score. There are things you can do do improve your score and the good news is, the reports are updated monthly, so changes can happen rather quickly if you do the right things. Here are some tips to get you started.
1 – Request a free credit report and look for any past due balances and pay them. Go to www.annualcreditreport.com to get yours.
2 – If you can, start the process of reducing all outstanding debts as much as you can. A zero balance is the goal but when that isn’t possible, evenly distribute the debt across open credit cards by transfering balances. You want to try to use less than 50% of the available credit. If you can get it under 30% that is even better and it will have more of an impact on your score.
3- Do NOT close accounts, even if you aren’t using them.
4- If you are married, keep separate credit cards. You can increase the score of one spouse by transferring some of their balance to the other spouse’s card. Remember, you want to try to keep the debt/credit ratio to under 30% if you can.
5- Request an increase to your credit line to reduce the debt ratio. But make sure the credit card company does not do a hard credit inquiry to do this.
Your credit score is really important to the home buying process and lenders want to work with you to improve on your score. The sooner you talk to a lender, the smoother your home shopping/purchase will go. If you’d like recommendations of very helpful and knowledgeable lenders, get in touch with me. I would love to refer you to some great people who want to help you buy a home.