Source: Tierra Mallorca
So, you’re considering buying a home and trying to get all your ducks in a row. You don’t have the funds to buy your future home in cash, so you’ll need to apply for a mortgage. As part of the mortgage process, you will need to get pre-approved and a requirement is a positive credit standing. Needless to say, your credit score is a pretty big deal when you’re looking to buy a home.
The major mistake many future home-buyers make is not taking the totality of their credit score into consideration far before they are ready to buy. Repairing credit takes a while, so you want to make sure you’re ahead of the curve and know what your score is.
Here are 3 helpful tips to alleviate credit stress before applying for a mortgage:
Know where your credit stands
Before you consider making any major purchases, like a house, a car, etc., you need to educate yourself on your credit standing. There are so many facets that make up a credit score, so ordering a credit report and taking a deep dive with a credit professional is a good idea. There are many websites like Quizzle, Credit Karma and Experian that will allow you to run your credit report for free! Many of these sites often offer great insights about your credit score and helpful tips on repairing it. If you’d rather talk to a credit professional one on one, there is always the option to contact the representatives at each company for credit advice.
Pay off your debts and keep paying your bills on time
If there is something on your credit report that is affecting your score negatively, you need to do your research on how to fix it. Most likely you missed a bill, or a credit card fell delinquent, in any case contacting the debt collection agency is always a smart move. In many instances, collection agencies will be lenient with you and allow you to enroll in a payment plan that’ll help you start minimizing your debt. Decrease as much of your outstanding debt as you can!
Another note is to pay your bills on time! This is the simplest way to not only improve your score but to prevent it from falling. Late or missed payments can be detrimental to your credit score.
Don’t open unnecessary lines of credit or jump the gun on buying a house
A new credit card may sound like a good idea but if you’re prepping for a future, major purchase, stay clear. Consider your budget for monthly spending and bills. Ask yourself if you can afford to tack another bill on. You don’t want to add to any debt you already have.
Something else to mention is, you don’t have to rush into any major purchase. Buying a home is a big deal and a big financial investment. Spend time making sure your credit is up to par and start saving some extra cash, so you can afford to give a bigger down-payment.
For more information on credit, pre-approvals and mortgage applications, contact an expert at Hall Financial.