05/25/2020
6 tips to keep your credit score looking good and getting ready for your first home purchase.
If your credit score isn’t as high as you’d like, there are 6 simple ways you can work on building it.
These tips can help first-time homebuyers improve their credit scores:
1) Make payments on time: This one may seem obvious, but it’s one of the biggest factors that affect your credit score. Even if you only owe $5 on a retailer credit card, you’ll get dinged if you miss a payment.
2)Put off new credit applications: Lots of credit cards lure in new accounts by offering rewards offers, cash-back programs and sign-up bonuses. Too many of these and lenders will think you’re too reliant on credit and a risky borrower.
3)Pay off credit card balances if possible: This tip impacts your debt-to-credit ratio. If you’re applying for a mortgage, keep credit card balances low. Don’t wait till the end of the month to pay off your cards, pay them off every week if you can, at least until you’re in the clear. Doing so could be the difference in a good interest rate and one that should have been better.
4)Be error-free: Get a free credit report and scan it for errors like incorrect name or address, unrecognizable credit lines, duplicate entries and other errors. Dispute any that you find.
5)Keep revolving credit accounts open: Wait until after your mortgage goes through to closing credit card accounts, even if they’re not used. Keeping them open shows you have available credit, but you’re not tapping into it. It improves your debt-to-credit ratio.
6)Fix your credit mix: Many people have just one credit card, especially if it’s one that gives you frequent flier miles on a favorite airline or cash-back on everything you buy. But having just one card limits the number of monthly payments you can make. Opening another card allows you to prove you’re more reliable when it comes to making timely payments. Just don’t do it too close to your mortgage application. Plan to get a few months of steady payments under your belt.
