Buying a new home involves various factors, which impact your location, size, and financing decisions for a house. And if you’re planning on taking out a loan to assist with your new home payments, lenders will look at several aspects to gauge your financial responsibility and likelihood of repaying a mortgage. The most influential piece: Your credit score.
In general, credit scores of 670 and above allow borrowers to access favorable rates and terms, while scores of 620 or lower are viewed as potential risks for the lender and, therefore, may come with higher rates and restrictions.1 It is crucial to get your credit in line before applying for a home loan to be prepared and ensure you are on track to unlock your dream house.
Let’s take a look at four steps you can take to improve your credit score today to streamline your home-buying process tomorrow:
- Less is more
Outstanding credit balances eat away at your credit score. Before applying for a home loan, pare down and pay off any credit card bills you can to work toward a clean slate.
- Timing is everything
Just as you are expected to be on time for an appointment, companies expect you to pay bills by their due date. Work on paying all bills on time — or early for an extra boost!
- Don’t overdo it
Using your credit cards too much can cause a slope in your credit score. Be cautious and reserve credit utilization for a few necessities, such as fuel and groceries.
- Don’t open new cards
One of the worst things you can do when trying to build your score is opening new lines of credit. Stick to paying off your existing credit card to raise your score without any setbacks.
Discover the various competitive home loans APGFCU offers and how we can help you get the keys to the home of your dreams!
Loans subject to credit approval
1https://www.investopedia.com/articles/personal-finance/081115/my-credit-score-good-enough-mortgage.asp