Thinking about buying a home in the next year or two? You might be looking for ways to increase your credit score to secure the best home loan possible.
To secure a house in this market, it’s important to get your finances in tip-top shape.
We’ve put together four tips to help raise your credit score ahead of purchasing your home.
- Check your credit score: This might go without saying, but being aware of your credit score is incredibly important. You can even sign up to be alerted for changes to your credit report through apps like CreditKarma or Experian. They make checking your score easy and won’t negatively impact your credit like a hard inquiry would. Monthly, take a close look at your report to make sure there are no mistakes in your credit history, specifically double check for closed accounts or out-of-date information.
- Be mindful of big purchases: Don’t open up a new line of credit before buying a home. I.e. if you can hold off until purchasing a new car or opening that new travel credit card until after you have secured a home – you will thank yourself later.
- Lower your debt-to-income ratio: Spend some time focusing on paying down high interest debts like credit cards with high APR. You may also want to consider negotiating a higher salary if that is plausible for you. Lenders like to see debt-to-income rations that are 36% or lower, with no more than 28% of that debt going towards mortgage payments (Investopedia). Take a careful look at your finances to determine in what ways you can reduce your monthly recurring debt and/or increase your gross monthly income.
- Get your bills on autopay: Missed or forgotten bills could mean a dip to your credit score. To stay on top of your credit, get your bills on autopay today and never stress about missing one.
- We hope these tips were helpful, but if you have questions or need more information on buying don’t hesitate to reach out!