Buying a home is exciting but can also be extremely nerve-racking if you don’t prepare yourself first. Before you get pre-approved and determine how much you can spend on a home, you need to build a solid credit score. Your credit score doesn’t have to be perfect, but it needs to be solid so lenders can see how well you can manage money, pay back debts, and more.
If your credit score isn’t great, no worries! There are a few ways you can work towards improving it to set yourself up for success. Let’s dive in!
Pay Bills On Time
Not only can not paying your bills on time result in late fees and more money out of your pocket, but late payments can also negatively impact your credit score. Late payments can stay on your credit reports for up to 7 years, so if you miss a payment, it’s essential to handle it immediately. Try to have a handle on all of your payments and make sure they are paid on time to avoid the repercussions of late payments and fees.
Keep Debt Amounts Low
The less debt you owe, the better. Even if you have a high credit limit, focus on trying to keep the amount you spend as low as possible. If you can, consider paying down what you owe before your monthly statement is due or pay several times throughout the month to ensure your balance is low. Avoid using your credit card to make any large purchases before getting pre-approved or throughout the home-buying process to ensure your debt remains low.
Avoid Applying For New Credit
While this might not always be completely avoidable, make sure to avoid applying for new credit right before you get pre-approved or start looking for a home. Many homebuyers will want to purchase new furniture for their new home and apply for a credit card to use on the purchase, not realizing it can drop their credit score.
Don’t Close Old Accounts
You might have some old accounts open that you no longer use, and while it might seem like the smart thing to do is to close them, it’s actually the opposite. Keeping old accounts open helps maintain the length of your credit history, which is one of the factors considered when calculating your credit score.
If you have questions about other ways to improve your credit score, how to get started in the home-buying process, or the real estate market in general, reach out to us at 512.609-8098 or info@prismrp.com! We would love to provide our expertise and answer any questions you might have.
