Your Credit Score is generally one of the things that can affect you the most when it comes to large purchases, especially in regard to Real Estate. While many people believe that you need to have a near perfect score to qualify for a home loan, this isn’t always the case.
While each lender is different and may vary by area, you can qualify for a home loan with a score of 620 or higher in most cases. While approval at the 620 rate is possible, the lower the score generally the higher interest amount you will be required to pay for the life of the loan. With interest rates at an all-time low, many people are purchasing homes to try and lock in the rates, however, most of the low rates that are being discussed are for those who have qualifying credit and thus, many people with lower scores are unable to lock in the historically low rates.
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Luckily, just as credit can be damaged, it can also be repaired. There are a few different ways you can help boost your credit score, whether in an attempt to purchase a new home, refinance, or simply better your credit for your future, here are a few things to try.
Try to make sure that all of your open credit accounts are below 30% usage, this will help build a better score, however, if you are hopeful to get your score to a healthier number faster, many financial experts suggest dropping your usage amounts to below 10% if possible.
On Time Payments
Missing even one payment can drastically affect your credit score and thus it is of the utmost importance to ensure that you are making all of your monthly payments on time. Lenders generally like to see at least 24 months of on-time payments to approve your loan.
Related: What is Considered a “Good” Interest Rate?
Keep Accounts Open
If you pay off an account or credit card, do not close the account. Closing accounts can actually hurt your score as many lenders want to see open accounts and responsible spending. Use your open accounts (if your usage allows) to buy gas or groceries, and then immediately pay the balance. This shows that you can use credit responsibly without carrying over balances or accruing late fees.
Don’t Open New Accounts
You should only open a new credit account if it is of dire need and completely unavoidable as this could not only hurt your credit but also end up taking longer for your credit score to rise or be repaired.
Ultimately credit repair can be done fairly easily as long as you are committed to the end goal and do your best to get a good grasp on your finances to help you achieve your credit goals.
If you’re currently searching for a new home, are ready to list and market your home, or if you have any questions regarding Camano Island Real Estate, please feel free to contact our office at any time.