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Preparing for Your Home Purchase: 7 Tips to Improve Your Credit Score
Today’s housing market is hot. Inventory is low in many areas so buyers need to be ready to act quickly to secure the home of their dreams. Be prepared by having your loan approval in hand and your credit score in order with these tips from First State Bank:
- Check your credit report. Your credit report illustrates your credit performance, and its accuracy is important when you apply for your mortgage loan. A free copy of your credit report may be obtained annually from each of the three credit reporting agencies. Visit the Federal Trade Commission’s website or call 1-877-322-8228 for your credit report. Note that you may have to pay for the numerical credit score itself.
- Set up automatic bill pay. Payment history makes up 32% of your VantageScore credit score and 35% of your FICO credit score. The longer you pay your bills on time, the better your score. Avoid missed payments by setting as many of your bills to automatic pay as possible.
- Build credit through renting. VantageScore’s scoring model, created by the three major credit bureaus, will now weigh rent and utility payment records. This will allow it to score as many as 35 million people who previously couldn’t get a credit score.
- Keep balances low on credit cards and “revolving credit.” Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your scores by limiting your charges to 30% or less of a card’s limit.
- Apply for and open new credit accounts only as needed. Keep this in mind the next time a retailer offers you 10 percent off if you open an account. However, if you need a new line of credit, compare rates and fees. First State Bank offers a variety of credit cards to meet your needs.
- Don’t close old, paid off accounts. According to FICO, closing accounts can never help your score and can in fact damage it.
- Talk to credit counselors if you’re in trouble. Using legitimate, non-profit credit counseling can help you manage your debt and won’t hurt your credit score. For more information on debt management, contact the National Foundation for Consumer Credit.
Get the home of your dreams! For further information regarding preparing for your home purchase, please contact a mortgage professional at First State Bank today.