3 Ways to Improve Your Credit Score When You Want to Buy a Home

The internet is full of tips for improving your credit score when you want to buy a home - but a lot of those tips are impractical and unrealistic. ("Save money!" "Skip out on your morning coffee!" "Don't have a car payment!" Those are good ideas, but they lack practicality... and they may not work for you.) This guide covers three no-nonsense ways to improve your credit score when you want to buy a home in Lakewood or Long Beach.

3 Ways to Improve Your Credit Score When You Want to Buy a Home

Check out these three ways to improve your credit score - for real - when you want to buy a home. Though this isn't financial advice (and you should consult a financial professional if you're thinking about buying a home), these tips may be useful to you:

  1. Check your credit report for errors and dispute issues immediately.
  2. Think about taking out a personal loan to consolidate debt and lower your interest payments.
  3. Be smart about allocating your payments.

Here's a closer look at each.

Tip #1 to Improve Your Credit Score to Buy a Home: Check Your Credit Report for Errors and Dispute Issues Immediately

According to a study by the Federal Trade Commission, one in five consumers had an error on their credit report. That's a pretty significant number - and it means that there's a 20 percent chance you have an error on your credit report, too. You can order your free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months.

When you get your credit report, comb through it carefully and look for any errors. If you see something that looks wrong - like a late payment that you know you made on time, or an account that isn't yours - dispute the error with the credit bureau. You can do this online, and it doesn't cost you anything.

Related: 3 tips to make your home offer stand out to a seller

Tip #2 to Improve Your Credit Score to Buy a Home: Think About Taking Out a Personal Loan to Consolidate Debt and Lower Your Interest Payments

If you have high-interest debt, like credit card debt, it can be tough to pay it down. A personal loan can help you consolidate your debt into one monthly payment, and it may have a lower interest rate than your credit cards. This can save you money on interest payments, and help you pay off your debt faster.

Before you take out a personal loan, shop around to compare rates from different lenders. You can use a site like CreditKarma to get pre-qualified rates from multiple lenders without affecting your credit score.

Related: The most common questions about mortgages, answered

Tip #3 to Improve Your Credit Score to Buy a Home: Be Smart About Allocating Your Payments

Two popular methods for debt repayment are the debt snowball method and the debt avalanche method. With the debt snowball method, you focus on paying off your smallest debts first. This can give you a quick win and some momentum to keep going.

The debt avalanche method is focused on saving money. You pay off your debts from highest interest rate to lowest interest rate, so you save the most money in interest payments.

There's no right or wrong way to do it - it's up to you which method you want to use. Just pick a method and stick with it until all of your debts are paid off. No matter which method you choose, make sure you're making more than the minimum payments on all of your debts. This will help you pay off your debts faster and improve your credit score.

Are You Buying or Selling a Home in Lakewood?

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