What you should know about conventional loans
Tips for improving your credit rating when buying a home
Buying a
new home can be quite a stressful and tedious experience, especially when you
know how much paperwork and information is required for the final transaction.
Your credit score is one of the most important and crucial elements when it
comes to getting approved. So today, we are going to show you some simple ways
to increase your credit score and improve your chances of getting a home loan.
Tips for improving your credit score when buying a home
1. Reduce your outstanding debts
When
applying for a mortgage, all of your existing debts will be taken into
consideration, as this will determine if you qualify and what interest rate you
will be offered. If you have credit card debt, make sure you pay off as much as
possible before applying for a mortgage. Other debts, such as medical bills,
car loans and even student loans, will also affect the amount of credit you are
offered. Be sure to pay off most of your debts as soon as possible, as this will
greatly improve your score.
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2. Pay often
Many
companies only require one payment per month on unpaid bills. However, if you
make payments on unpaid bills every two weeks or even every week, this is one
of the easiest ways to quickly improve your credit score. An added benefit is
that by making more frequent payments, you can also reduce the interest you pay
on unpaid bills.
3. Don't
close unused business or credit cards
It may be
tempting to look at your credit report and close any unused credit or business
cards on it. However, if you close a number of accounts right before you apply
for a mortgage, it will have a negative impact on your credit score - the
longer your credit history, the better your chances of getting a loan. If you
feel the need to close accounts that have already been paid off, it is best to
wait until you are approved for a mortgage.
4. Get a secured credit card.
If your
credit score is low - or worse, if you have no credit history at all - you can
build one quickly with a secured credit card. Unlike regular credit cards, a
secured credit card requires you to pay an initial deposit, which is held as
collateral by the issuing company. In many cases, after a few months of
responsible use of the card, you will be extended credit, giving your credit
score the boost it needs.
Tips for improving your credit score when buying a home.
5. Pay all your bills on time.
Many people
think their credit score is only affected by payments on credit cards, store
cards and car loans. However, utility bills and medical bills are also
considered when determining your credit score. Therefore, all bills that are in
your name must be paid on time each month.
If you
follow the above tips for a few months, you can significantly improve your
credit score. It is important to remember that the higher your credit rating,
the more likely you are to get a mortgage and the lower your interest rate.
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