Planning to buy a home? 5 vital changes you need to make to your credit.
When you plan out a strategy for paying for a home with enough time, you can get low mortgage interest rates and put down a down payment enough to make your reimbursement more than sensible. This is the main reason why many families wait until the right time to make an offer on their dream home. The other reason why you should wait a little longer before buying a home is your credit score. Many real estate customers do researches on how they can reduce their debt and increase their credit score before finding a home because they know how much can be kept aside. There are 5 vital changes you can make to your credit to make home ownership more worthwhile and enjoyable.
1. Shun applying for new lines of credit.
You will start getting attractive new offer for credit cards being sent to your home once your credit score starts rising up. Credits cards with bigger credit lines are not a good idea when you are planning to buy a home. To reduce the balances, you should ask your credit card issuers for a reduction or other benefits or an interest rate.
2. Repay your mortgages.
It is advisable to start by paying the debts with the largest dollar value if you have multiple loans. You will end up with more money saved and your credit will go up.
3. Pay down your auto and student loan.
Refinancing all your loans will make the total amount due on you loan a lower rate. To show that you are well on your way to satisfy all unpaid students loan, you credits report will be updated.
4. Remove Outstanding Collections.
If you have any type of judgment, outstanding collection or past due accounts can stop you from getting your mortgage application approved. Regardless of whether the account in question has a small value, lenders are unwilling to issue funds to people who have had a hard time to honor past agreements. That is why you should be cautious and ensure that you have taken care of all past due accounts even those that have already gone under collection before applying for a mortgage. Having a history of late loan payment can impact your credit score negatively and make it difficult to get a home loan, but if you take care of the collection accounts early you will be able to own the home of your dreams.
5. Have any Errors Taken Care of.
If at one time you had indicated a wrong address in your profile, don’t think that you are safe, mortgage providers will check every information before they create your profile. You don’t know who you will be accidentally linked to if you provide wrong information, therefore, ensure that you provide past employers and addresses. There may be someone with a similar name to yours but who has a worse credit score, and you don’t want to be mistaken for such people.
There are several ways that you can follow to improve your credit rating and qualify for a home loan. By making all the changes that are stated above, you just need to wait for a few months and you’ll observe a change in your credit score rating.
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