August 22nd, 2010 8:42 PM by Wendy Thomas
Have you talked to a lender about buying a house, and he or she told you that you could get a better rate if your credit score was higher? Or maybe you can't buy until your scores increase... Either way, here are some things that you can do to get to that point.
1. Pay your bills on time. Sounds simple, but that's not always the case. If you haven't been paying them on time, start now, and be consistent!
2. Pay down high credit card balances. You can have a balance, but the best case scenario is to have 30% or less of the card's limit used, and no more.
3. Keep old accounts open, even if there is not a balance. This is one option that you may want to talk with your lender about, especially if you have a lot of open accounts... He or she may recommend something different. But this helps with your credit history, which in turn, raises your credit score.
4. Don't open any new accounts, buy a new car, or any other large ticket item... You don't need to spend any unnecessary money during the home purchasing process-- you may unknowingly cause yourself even more trouble! If you need to make a larger purchase during the process, ask your lender first if it's a good idea.
5. If you pay cash for everything, you need to use your credit cards a little more. Sounds backwards, but you can't establish credit if you don't use it.
6. Keep an eye on your credit report. Pull your yearly free report, and make sure that you are aware of all of the accounts showing on your report. Identity theft and mistakes are made all of the time, and you need to make sure that you are aware of what's on your report.
These are just a few basic ideas-- talk to a lender to develop a plan that will help you, specifically, get your credit to where it needs to be, in order to get the best rate on your home loan!