Planning To Get A Home Loan? 4 Tips To Boost Your Credit Score
Homeownership is usually called the American dream, and for good reasons. It comes with immense financial stability, freedom, peace of mind, and flexibility. Are you planning to be a homeowner but do not have enough money for it? You do not have to save for years to have your own house. You can get it as soon as now by taking a home loan. However, before the mortgage company approves your loan, they have to check your credit score. Here are four tips for raising your credit score to streamline the home loan application process.
1. Minimize Usage of Credit Card
While using your credit card responsibly can raise your credit score, you may want to go slow when planning to take a home loan. Most importantly, avoid using the credit card up to its limit. The mortgage company wants to know if you are a responsible credit card user. They will also factor in bills payable to calculate the mortgage you can comfortably finance. So using your credit card less is more likely to help you secure a higher amount.
2. Fix Credit Report Errors
It is advisable to go through your credit report regularly. There could be errors that can drop your credit score, hindering the home loan application process. You will want to check for any incorrect information like missing payments or cleared debts but still active. Also, check for errors in your personal information. Is your date of birth, address, or name accurate? If not, reach out to the credit reference bureau for rectification before applying for a home loan.
3. Keep Your Old Credit Card Account Open
You certainly don't want anything to do with your old credit accounts. But closing them when you are about to take a home loan will hurt your credit score. The mortgage company wants to see your credit history to determine if you are good at paying your debts. So closing the old accounts is like erasing the very information that will convince them you will pay back their money. Keeping those accounts open as long as possible will help raise your credit score, building trust with the mortgage company.
4. Avoid Taking a New Debt
Financial emergencies happen all the time. And you may be tempted to take an emergency loan to bail yourself out. However, taking a loan when you are just about to take a home loan may hurt your credit score. Yes, it could portray you as someone on their last financial leg.
Keep these tips in mind, and you will surely find a home loan tailored to your specific needs. For a stress-free home loan application process, be sure to work with a competent mortgage company. They will be there for you every step of the way.
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