“If (your score is) below 600, you’re probably not going to buy a home in the short term,” says Mike Sullivan, director of education at nonprofit credit and debt counseling agency Take Charge America.
Qualifying for the best mortgage rates start at a 740 credit score. Scores below that threshold will likely have higher interest on their home loans. Get your credit ready for homebuying season to increase your chances of building up your credit and buying a home!
Tips for Getting Your Credit Score Ready for Homebuying
1. Make sure to pull a copy of your credit report and check to see where your score stands. Scan your credit report for accuracy. Have these errors corrected by contacting the credit bureau in question.
2. Under the Credit Card Accountability Responsibility and Disclosure Act of 2009, or Credit CARD Act, everyone is entitled to one free credit report from each credit bureau every year. Obtain a copy of this report from AnnualCreditReport.com. It won’t come with your score — you can purchase that for a nominal fee.
3. If you are behind, you want to bring those up to date as soon as possible. Delinquent accounts are a huge red flag to mortgage lenders because they demonstrate a lack of ability to repay debts. Be patient and make all of your payments on time and slowly build your score up.
4. Avoid applying for other loans, including store credit cards, particularly in an attempt to improve this aforementioned credit utilization rate. Applying for new credit generates hard inquiries on your credit report, which could ding your score.
5. Don’t close any accounts while you are looking for a mortgage, as the closure could send your credit utilization skyrocketing in the wrong direction.
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