Buying your first home is a big financial step in life that can help you settle into a neighborhood and stop renting. Today, you can qualify for the best interest rates if you have a solid credit score. If you’re getting ready to purchase that first home and your credit score isn’t ideal, try these steps to give your score a quick boost before you apply for loans and mortgages.
Pay On Time
First, immediately take control of your monthly bills and make sure you don’t miss any payments or pay late. Set up your bills to automatically deduct from your checking account on or before the due date if possible. Getting your payment history to be positive is a great way to improve your credit score.
Be an Authorized User
Another way to get a quick improvement in your credit score is to ask a relative or close friend to help you out. Your friend or family member can add you as an authorized user on one of their credit accounts and help boost your score. Before going forward with this strategy, make sure you ask a friend or family member who already has excellent credit and high credit limits on their accounts.
Fix Reporting Errors
You should also be on the lookout for potential negative credit histories that may be impacting your credit score. Carefully review your credit report before any major credit check to see if there are negative items or errors. If you see something that is wrong and causing your credit history to look bad, contact the credit reporting agencies to dispute the error.
Get Higher Credit Limits
Part of your credit score is the ratio you have of current debt to available credit. You can easily improve this ratio if you increase your credit limits. To do this, talk to account services for your credit card accounts and ask for a higher limit. If you have debt on the account, this can help give you more available credit and boost your score a bit.
Pay Off Debt
The next thing to accomplish after getting a credit increase is paying off your debt. Paying off a lot of debt may not be a viable option in a short period of time. You can make a plan of action to tackle debt so you don’t mismanage your credit in the future. In the months before you try to buy a home, stick to a strict budget and put your extra funds into paying off balances.
Investigate Collections
If you have any credit accounts that have gone into collections, you may see serious repercussions on your credit score. It’s important to attempt to pay off debt before it is passed onto another company, like a collections agency. If that isn’t possible and the balance has already gone into collections, you may need to negotiate directly with the collections agency to get negative marks removed from your credit history.
Check Your Credit Frequently
The last way you can get a big boost in your credit score in a short period of time is with extensive credit monitoring. Everyone is entitled to one free credit report per year, but it may make more sense to enroll in a credit monitoring service so you can be updated about your score more frequently. In the year or months before buying a home, it’s vital to be well aware of your credit situation.
You can get into a better financial situation and be ready to buy your first home if you focus on improving your credit score. A year or so before trying to buy a home, work on raising your credit score and giving yourself a better chance to get a lower interest rate on your home loan.