How to improve your credit score to purchase a house

April 22, 2021 in Blog, Home Buyer Guide, Mortgage Loans

Credit scores play a big role in determining whether you will qualify for a loan and what your loan terms will be. It is a good idea to run your credit report every year to make sure you are doing everything you can to maintain or improve your credit sccore. Keep your credit score high by doing the following:

  1. Check for Errors– Once you run your credit report. Go through it with a fine-tooth comb and check for accounts that are not yours. Collections that may have already been paid, and any other inaccurate information. Then immediately do a dispute with each of the credit bureaus to help clear up any inaccurate information.
  2. Pay down your credit cards- You should keep your accounts at less than a 20% utilization rate. So check to see what your limit is and multiply that by .20. This will give you what your balance should be, and pay down to that amount or less. If possible pay off your card every month in full. If not possible, check for balance transfer offers or possibly get a personal loan to pay off all of your balances.
  3. Don’t charge to the max- Don’t max out your credit cards. Once again keep it to a 20% utilization rate or even better about $20 per month just so they are being used, but if you can’t pay your card off every month, pay as much as you can.
  4. Credit Difficulties-If you have credit difficulties, such as collections or bankruptcy, you may need to wait a certain amount of time to apply for a loan. Most lenders require at least 2 years from the time reported on your credit.
  5. Don’t buy new home items on credit- If you are in the process of buying a house this is a biggie. So many people get excited about their house and start buying appliances and furniture on credit or worse a new truck for moving right before they close on their home. This mistake could cost you actually losing your house because the mortgage company no longer approves you.
  6. Don’t open new credit card accounts-You may be tempted when new card offers come, but don’t open a ton of accounts in the couple of years prior to wanting to buy a house. Lenders don’t like seeing a ton of inquiries and may find you to be a bigger risk for them.
  7. Shop all at once- If you are shopping lenders, do it all within 30 days. Multiple inquiries from lenders are all counted as one when you are shopping for things such as cars or mortgages. It’s ok to shop, just do it closely together.
  8. Ask for a limit increase- Another strategy you can use if you are over 20% utilization is ask your lender for a credit increase. I prefer doing this with lenders who will not do a hard pull on my credit, so ask before they actually pull a new report.

I hope these tips help. Watch the below video for further explanation.

monica

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About Me

About Me

Hi I'm Monica! I'm a Real Estate professional in love with houses, especially vintage houses. I even have my Historic Homes Specialist designation. I enjoy decorating and rehabbing and helping my clients create their dream home with inexpensive updates. I also love helping sellers get top dollar for their property by taking the dated out of their home and staging in a modern simplistic way. I'm also obsessed with Mid Century furniture, so if it doesn't fit in my house, you'll find it in my Etsy Shop. I enjoy coffee and thrift store shopping to look for items to repurpose and use in house. And of course anything vintage, I’m a bit of a June Cleaver. I’m a wife and a mom of teenage twins that I homeschool. I am currently a Realtor in San Antonio, TX, and a lender in both Texas & California. But if you are from Southern California don't worry I have connections, I also help educate all over the country about the home buying process and have a team of people that i work with to help you reach your goals. We moved to SATX from SOCAL in 2018 to simplify our life. I love it here and have helped several people relocate. Read More

Monica

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