5 Easy Ways to Raise Your Credit Score Average for a Home Purchase
11/01/2011
If you want to qualify for the best mortgage rates, you'll need a high credit score. Unfortunately, many potential homebuyers don't have a high credit score and aren't able to take out even an FHA mortgage due to tightened lending requirements. Five ways to improve your credit score are listed below.
1. Keep all your accounts open. Never close a line of credit unless there are fees attached to keeping it open. Credit bureaus compare your total debt amount to the total amount of credit available to you. The less credit available, the higher the debt-to-credit ration is. This decreases your score. Keep all accounts open.
2. Don't spend more than half of any credit line. In other words, if you have a line of credit for $800, don't use more than $400 of it at any given time. Credit bureaus like to see this, for whatever reason. Your score will actually improve if you drop your spending from $500 out of that $800 to just $400.
3. Wait it out. If you've been through a bankruptcy or a foreclosure, the sad truth is that you're going to have to wait. It takes years for these types of delinquencies to disappear from your credit report. While you're waiting, build up your credit in other ways.
4. Use a credit line for minor transactions and pay them off immediately. This will show credit bureaus that you are familiar with credit and that you are good at paying it back.
5. Make your payments on time. This is the most important factor credit bureaus look at when determining your score. Do not ever miss a payment. If you have, bring the delinquent debt current as fast as possible. You'll need to establish at least two years or more of on-time payments before you apply for a mortgage.
These tips should help you build up your credit score and prepare you to qualify for the mortgage you need for your home purchase.
