Is your credit score the be-all and end-all when buying a home? Not at all. But it will play a role in your mortgage application. It’s likely to impact what interest rates and loans you qualify for.
If you plan to buy a home in the next few years, go ahead and pull your annual credit report now to see where you stand. Don’t like what you see? These four steps may help boost your score before you begin looking for a home:
- Start paying down your debts. Work on the higher-interest ones first, as this will free up more cash to pay down your other balances.
- Pay on time, every time. Payment history is a huge factor in your score. Late payments can send it plummeting. Set up automatic payments to ensure you never miss another due date.
- Steer clear of new loans and accounts. Don’t open any new accounts or apply for new loans as you approach the home buying process. The new activity will result in what’s called a “hard” credit inquiry, which can take down your score.
- Report any errors you find. Don’t recognize some of the accounts, cards or collections listed on your credit report? Gather proper documentation and report the errors to the credit bureau.
You don’t have to have perfect credit to buy a home. But remember that the higher your score, the simpler (and more affordable) the process will likely be. Take steps to improve your score now and reap the benefits when it comes time to buy.
Need help interpreting your credit report? Reach out today for a referral to a mortgage professional.
Nicole Kasten | Colfax Realty Group
Licensed Broker Associate
Phone: (786) 266-7523