How to Improve Your Credit Score to Get Home Financing

Most people have to take out a mortgage to buy a home - few people actually have hundreds of thousands of dollars tucked away in their mattresses (or in a bank, but who’s keeping track?).

Unless you’re stocked up on cash, you’re going to need a mortgage, too. And that means you’ll need to make sure your credit score is up to snuff.

So what can you do if it’s not so shiny?

How to Improve Your Credit Score to Get Home Financing

A good credit score is important when you’re buying a home. Lenders use your score to determine how likely you are to pay your mortgage on time, every time. If your credit score is high, you’ll qualify for better interest rates and terms… but if it’s low, lenders may decline to let you borrow money at all. If they do, you’ll be looking at higher interest rates.

The first thing to do is check your score. You can sign up at CreditKarma.com for free, and you’ll be able to check for updates as often as you like (they update scores weekly). You can take a more in-depth look by getting a free copy of yoru credit report from AnnualCreditReport.com, too.

Here’s what lenders really look at:

Perfect credit: 850

Excellent credit: 760–849

Good credit: 700–759

Fair credit: 650–699

Low credit: 650 and below

The national average is somewhere around 700, give or take a few points.

You can boost your score by:

• Looking for errors. If you find errors on your credit report (a lot of people do!), report them to the reporting agencies and dispute them.

• Pay down debt. This takes time, but the lower your balances are, the higher your credit score will be.

• Make sure all your bills are current. Late payments make HUGE dents in your credit score, so make sure you’re all paid up on everything before you try to pay down your balances.

• Get a secured credit card or loan. If you’re unable to get unsecured credit, save up a few hundred dollars and apply for a secured card or loan. The lender knows it can use your deposit if you default, so it’ll be more comfortable extending you credit (even though it’s your own money on the line).

Are You Selling a Home in Lakewood or Long Beach?

If you’re selling a home in Lakewood or Long Beach, we can help. Call us at 562-882-1581 to find out how we’ll market your house to all the right buyers so you can sell it quickly and at the right price.