10 Tips: Improve Credit before Buying Home

Posted by True Siesta Key on

The home buying process will require you to reveal your finances to your lender, including your credit score. The higher your credit score, the better your chances for approval on your home loan. Here is our list of 10 tips (5 things to do and 5 things to avoid) to improve your credit score before applying for a mortgage.

5 Things to Do

(1) Make sure you obtain a copy of your credit report and carefully correct any errors you find. Look for mistakes; make sure your credit score isn't suffering from someone else's errors. Since checking your credit report doesn't impact your score, check it regularly.

(2) Pay your credit card balance in full every month whenever possible. Do your best to keep your credit balance low in comparison to your credit limit. A high balance/limit ratio will drive your credit score down.

(3) Pay your bills on time. Late payments will hurt your score.

(4) If you have had credit issues in the past, wait a year at least (is possible) before applying for a mortgage. After 12 months, you should be penalized less.

(5) Seek help from a legitimate, non-profit credit counselor when you have serious credit problems.

5 Things to Avoid

(1) Avoid moving debt around from one credit card to another to raise your score. Transferring debt between credit cards may lower your score.

(2) Avoid opening new credit card accounts to raise your score. Opening new credit card accounts too quickly may signal that you're not handling your credit responsibly, and too much available credit may lower your score.

(3) Avoid closing credit card accounts to raise your score. Closing accounts won't remove them from your report.

(4) Avoid using credit cards to buy things for your new home until after your home loan is approved. Your home purchases will be useless if you cannot obtain a mortgage.

(5) Avoid getting "help" from finance companies. Even if you pay on time, interest is generally high, and may even be considered a sign of poor credit management. Avoid anyone who promises a quick fix. There are no quick-fixes, except paying down debt and successfully disputing any damaging misinformation on your credit report.

If you are considering buying a home in Siesta Key or Sarasota, Florida, don't hesitate to contact us for a tour of homes and condos for sale in beautiful southwest Florida.


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