Rising interest rates and home values are making it more and more difficult for first-time homebuyers to qualify for mortgages. Often, they pour all their financial resources into saving for a down payment without considering how a FICO score affects them. Not only does a low score create difficulty in obtaining a mortgage, but it also means a higher interest rate, costing thousands of dollars throughout the loan. Our real estate agents want to share ways to ensure a great credit score before you shop for a house. 

• Pay your bills on time every time.
  Lenders need assurance that they are making a wise investment by loaning you money. A low FICO score is a red flag telling them the buyer is high risk. Anything less than 620 is problematic. For the best available interest rate, lenders will look for scores of 720 or higher. A single late payment can mean a drop by as much as 180 points. If bills are difficult to manage, try to arrange payment dates to make them easier and set up auto-draft to eliminate the possibility of forgetting to make a payment.
  
  
• Pay off debts.
  Even if you carefully manage to make your payments on time each month, if your debt-to-income ratio is greater than 35%, your FICO score will suffer. When saving for a new home, don't put anything on a credit card that isn't vital. If you must charge a critical expense, such as a car repair, don't rely on minimum payments to eliminate the debt. Pay it off as quickly as possible. Anything you use credit to purchase will increase the price. A $10 item will end up costing about $30 after interest charges. 
  
  
• Don't close out zero-balance credit cards.
  Credit bureaus compare available credit to the amount of credit used. If you close a card, the credit limit will no longer be available to you, altering that percentage. Companies will close cards that are not used, so periodically, use the card but pay it off as quickly as possible. If you pay it before or on the due date, you will not incur any interest charges. If you have no credit cards, you may want to consider opening one, even if you must make it a secured card. That means backing up the debt with a deposit that equals the credit limit. These cards frequently mean high interest rates, so pay off your purchases immediately. 
  
  
• Ask for monthly expenses to be reported to credit bureaus.
  Experian Boost allows you to link your bank account to that agency and allow it to see payments for rent and utilities. Your healthy bill-paying habits will be reflected in your credit score. You can include rent, utilities, streaming services, internet services, and other monthly costs. The service is free and offers other reports and tips to get your FICO score even higher! 
  
  
• Clean up your credit report.
  The federal government requires the major reporting bureaus to let you see your report for free once each year. The only website that offers this service is annualcreditreport.com. This is where you will find old unpaid bills that you may have forgotten about and mistakes like debts that don't belong to you. Each bureau will provide directions for eliminating them. 

Before you shop for North Canton homes for sale or Akron homes for sale, do everything you can to boost your FICO score. If you need more assistance, contact a non-profit counseling service free of charge. Once you have, contact us and let us help you find the home of your dreams.