The time has finally come! You’ve decided to buy your very own house, and started to look into the home buying process. Soon you’ll come across the part when you need to get yourself approved for a loan.
One primary component lenders will examine is your credit score. If you have good credit, you’ll get a higher chance of getting endorsed. Naturally, bad credit means bad news because lenders will be leery of committing to you.
Fortunately, there are things you can do to increase that 3-digit number, and be one-step closer to your dream home.
Here are four ways on how you can improve your credit score:
- Audit your credit report. Get a copy of your credit report from the three credit reporting agencies. You can request for these reports at the same time, and get them for free once in every 12 months. Upon receiving the documents, carefully review the items one by one. Make sure that each transaction was authorized, and file a dispute on any inaccuracies. It’s not uncommon for errors and mistakes to find their way into those reports every now and then.
- Pay your bills on time. It goes without saying that if you want to boost your credit score, paying your dues on time is crucially important. Although this in itself is enough to improve your credit, you can further increase it by paying a little more than the minimum amount due. It might take a couple of months for this to reflect so be sure to never miss a payment.
- Avoid making hefty investments. Concentrate on settling as much as you can from your current balance, and bypass adding debts to it for the months leading up to the house purchase. This means giving up on buying a car and sidestepping grand holiday trips – at least until after everything has been resolved. Ideally, it’s best not to spend more than a third of your income or carry a balance that’s over 50% of your card’s limit.
- Hire a credit repair agency. With the hustle and bustle of everyday life, you might not have the time nor energy to sort out the issue. Perhaps it’s the feeling of being overwhelmed that prevents you from taking action. It could also be not having any idea on how to make things better. Whatever the reason may be, feel free to hire professionals to help you throughout the entire process.
Turning bad credit scores to good does not happen overnight. It will take months – maybe a whole year – to improve your credit. Be smart with your purchases, and don’t let interest (from late payment) pile up. Plan ahead of time – way ahead of time! If you want to buy a house in the second half of the year, then apply these steps right now. Suffice to say… it’s never too early to start.