A buyer’s credit rating has become vital to the home buying process. Think of it as the finance world’s personal stamp on how well they think you can manage your assets. A higher score means a lower risk for a lender. This means they will be far more willing to grant you a lower interest rate or more amicable terms on your mortgage.
No matter if you are a financial genius or have had a rocky purchasing past, there are always steps you take to improve your credit score. Here are some of the most effective ones.
Get a Copy of Your Credit Report
The very first step is to see what banks and lenders have to work with. Obtain a copy of your credit report and see what is listed. This action can cause a small reduction in score with some credit agencies, but Equifax claims it will not have an adverse effect whatsoever on their assessments.
Once you get your hands on your report, look for anything out of the ordinary. You may have debts erroneously listed that you took care of a long time ago. Other times, you might have small balances you forgot about. Close out as many unused lines of charge credit as possible with smaller institutions like department stores, especially if they have low balances.
Your credit score will not go up with every penny you pinch. If you amass enough savings in a high interest savings account, you can avoid emergency type actions like having to use a credit card to buy groceries.
Having a moderate balance on your credit card is good for your score, but you want to maintain it at a steady level for a while. So get out the piggy bank.
Pay Your Bills on Time
This strategy is the easiest way to increase your score. It will only cause slight increments, but paying bills regularly and consistently can go a long way towards demonstrating financial responsibility.
Increase Your Credit Limit
For the cards you do have, find out if you are eligible for a higher spending limit. The more money you are able to borrow, the less of a risk you appear.
Avoid Credit Inquiries for a While
Before applying for your mortgage, you will want to have had a blank period of credit inquiries for several months. Each time you make an inquiry, your score can take a hit.
When applying for something like a student loan or a car loan, clustering your inquiries together will result in it being listed as only one period. Be selective about when and why you make an inquiry.
With these actions, you may see a healthier credit record that can make mortgage shopping a little bit friendlier as a buyer. For more home buying tips that can help you purchase a beautiful piece of Vancouver Westside real estate, visit our buying page.