Email Post to a Friend: Buyers: How to Improve Your Credit Score

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Buy a Home - Improve Credit Score - DeHOFF REALTORS®

Before you peruse real estate listings or pick out curtains, there's one thing you need to check that's more important than anything on your list. That one thing is your credit score because it will determine your ability to qualify for a mortgage and the amount of money you'll pay over the life of that loan. What you find may surprise you, but our real estate agents know there are some things you can do to get those numbers up to where you can qualify for the most favorable loan terms and the best interest rates.

The average credit score in the United States is 711. That's considered "good" credit. Those with "very good" credit have scores between 740-799, and those with "exceptional" credit fall between 800-850. These three ranges will allow you to qualify for most loans, but the higher the score, the better the loan terms and the lower the lender's interest rates.

  • Pay Down Your Credit Card Balances
    It would be best if you got your credit utilization rate down to the point that is far below the credit you have available. Anything above 30% can weigh heavily on your score. Ideally, you want to pay your credit cards down to zero to not waste money each month on interest charges. The exception to this is any 0% interest cards you can pay off at your leisure, but even those should not be higher than 30% of your credit limit.

  • Keep Accounts Open
    Don't close credit accounts! It seems counterintuitive, but the length of credit history accounts for 15% of your score. The longer the history, the better it is for your score. Further, be sure to use old credit cards periodically. Many issuers will close dormant accounts, so spend a few dollars on each card every year to keep them active. 

  • ... But Don't Open Accounts
    Credit inquiries can lower your score, so you want to avoid opening any new accounts prior to purchasing Akron homes for sale or other properties. Unless it's an absolute necessity, focus on paying down balances and paying off installment debt. This will also help to improve your debt-to-income ratio, which is another crucial number lenders will examine.

  • Make Your Payments
    Payment history accounts for 35% of your score. Make sure that you pay existing mortgages, car loans, medical bills, etc., on time, every time. Once payments are missed, they can stay on your credit report for a very, very long time.

  • Check Your Report for Errors
    An alarming number of credit reports have inaccurate information on them. Before exploring North Canton homes for sale, explore your credit report for mistakes made by creditors. If you do discover errors, file a dispute. The creditor then has 35 days to investigate and respond. If it is a true error, they have a legal obligation to remove the offending information.

  • Be Ready to Negotiate
    Creditors don't want to hurt your credit; they want your money and the debts you owe them. Often, creditors will remove negative information from a credit report if you pay the debt early or adhere to an established payment plan. If you've found yourself in a bind, it never hurts to try negotiating a solution.

When your credit is in order, and you're ready to buy, contact usand we'll help you find the home of your dreams. It's our pleasure to help guide you through the process and give you the reliable advice you need to secure the most favorable mortgage for your future home!

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