Looking to Buy a Home? 3 Ways to Up Your Credit Game
If you’re in the market for a house then you’re in the market for a loan, and the best way to lock down a good interest rate on that loan is to supercharge your credit score. Without good credit, you could end up paying tens of thousands more in interest on your loan. Before you can do anything, though, you’ll need to know what your credit score is.
There are a couple of different ways you can do this: First, depending on your credit card, you may already have access to a credit score through their online portal. If your card provider doesn’t provide this, then you can still access your credit score through a few free online services such as CreditKarma.com, freecreditreport.com, or AnnualCreditReport.com.
Once you have your score, you can start to making changes to pump up your credit game!
1. Pay down your credit cards, don't transfer.
Don’t do a balance transfer unless you absolutely have to. Credit rating agencies are wise to that trick nowadays, and it won’t help your general score. Only transfer if you aren’t able to keep up with interest rates. Otherwise, pay them down the old fashioned way.
If you’re only carrying minimal balances on your cards, then pay those down too. Make a habit of using only one or two cards for daily use, and try to avoid nickel and diming yourself back into debt.
2. Pay your bills on time and avoid risky behavior
It may not seem like it, but an unpaid medical bill can hurt your credit score just as much as missing a small payment on your credit card. You should also try not to engage in behavior your creditors view as risky; these can include payday and title loans, or even something like buying a guitar at a pawn shop. You’ll thank yourself when you lock in a decent interest rate for your new home.
3. Use only what you need
If you’re thinking about making any new major financial moves, it’s best to hold off since it could negatively impact your credit. Try to keep your financial situation as stable as humanly possible. Don’t buy a new car, don’t open a new credit card account, and try not to move until you’re moving into your new home. Keep things on an even keel until you’re locked in at a good rate with your lender.
Finally, if the above advice seems impractical or you’re having trouble implementing any of these steps due to your own personal financial situation, then consider seeking out professional help. A financial planner or credit coach may be able to help you talk down any debt issues you’re having and help you on improving your credit score so you’ll be able to get a better deal down the road.
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