Cultivate a Good Credit Score
If you’re looking to buy a home this year, the first thing you need to do is make sure your credit in order. Buying a home is a huge financial investment and expense, and your credit score is a significant factor when making this decision. There are several options available to you if you are looking to improve all aspects of your credit, ranging from what you know about your credit to using your credit to your advantage. By getting your credit in order now, it will help ensure that you won’t be turned down when you find that dream home.
- Know your credit report
It’s important to know your credit score, and to check it regularly, when it comes to buying a home. Your credit report is used by lenders to see your history, and it gives you a chance to see what the lenders see about you. Your credit score is used to determine your loan amount and mortgage, so it’s good to know where you stand before talking with a lender.
- Stop maxing out credit cards
Routinely maxing out your credit cards doesn’t show you are responsible with your credit. Get your spending under control by creating and sticking to a budget. This budget can also help you figure out how much money you can spend after you buy your home.
- Pay more than the minimum
Save yourself money by paying more than the minimum balance due on your account. Paying more will also help reduce what you owe quicker. The money you save from the interest can be put towards a down payment. You may even want to put the money into a savings account where you can earn interest to reach your financial goal faster.
- Keep a low credit-utilization rate
A credit-utilization rate refers to how much of your credit you are using. A high credit-utilization rate can be a red flag for lenders. Apply for new credit carefully and thoughtfully to make sure you aren’t overspending and increasing your rate.
- Stay up to date
It’s important that you make your payments on time, especially in the months leading up to buying your home. Paying your bills on time is an easy way to show creditors that you are responsible and reliable. If you have trouble making payments on time, consider using automatic debit payments. This way, the payments are made on time each month and helps increase your reliability when it comes to your credit.