March 27 2021

Four Ways to Increase Your Credit Score Before Buying a New Home

by Erin

Woman Viewing Credit Score on a Tablet

Purchasing a new home can be an exhilarating moment in your life, but the process can be complicated when there are obstacles in the way, like a low credit score. Having a low credit score is nothing to be ashamed of and is not the end of the world. Many accumulate debt for several reasons like the loss of employment, a medical emergency, and other financial hardships that you have no control over. No matter where your credit score is on the scale, there are some sure-fire ways to make improvements and finally purchase the new home of your dreams.  Here are four ways to increase your credit score before buying your new home.

 

Pay Your Bills on Time

 

Your payment history is one of the most significant factors that will affect your credit score and your ability to receive a home loan. Lenders want to know that you are reliable that you will pay them back on time. If you are not already doing so, ensure that your bills are all paid on time or early. You can schedule your payments through automatic bill pay with your banking institution or set up autopay through your account, so you never have to worry about a missed payment.

 

Dispute Credit Report Errors

 

Looking at your credit report may be a daunting experience, especially when that golden number isn’t looking very shiny. Sign up on websites like annualcreditreport.com or creditkarma.com to take a good look at your detailed credit report and make sure that everything looks the way that it should. If you come across any mistakes, you can dispute the errors. The credit bureaus have thirty days to look into it and respond. Once confirmed, the disputed mistake will be removed from your credit report, which will improve your credit score.

 

Use a Secured Credit Card

 

A secured credit card is a credit card funded by an upfront cash deposit, and the credit limit is the same as the amount of your deposit. So if you deposit $300 on your secured credit card, your credit limit will be $300. This is an excellent option for someone who may not qualify for a traditional credit card and needs to boost their credit. If you decide to go this route, make sure that you apply for a secured credit card that reports to all three credit bureaus when choosing this option.

 

Negotiate Your Debt

 

If you have bills in collections and receive letters in the mail and those annoying phone calls, you may want to pick up the phone and try negotiating your debt to a lower amount. You can also discuss creating a payment plan that works for your budget. Ask the debt collector to remove the negative information from your credit records. When doing this, make sure to always get your payment agreement in writing before proceeding. 

 

Taking these steps will take your credit score from zero to hero and help propel you into homeownership in no time!

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