3 Ways To Raise Your Credit Score Before Applying For A Home Loan
If you’re thinking about buying a new home soon, one of the best ways you can prepare yourself for this financially is to improve your credit score as much as possible.
Up until you need to apply for a loan, many people don’t even think about their credit scores. But if you’ve fallen into this habit, your score might be lower than you’d like. Luckily, there are things you can do to improve your credit score before you attempt to get a home loan.
To show you how this can be done, here are three ways to raise your credit score before applying for a home loan.
Rectify Any Delinquent Accounts
One big reason why people often have a lower credit score than they might like is because they’ve allowed some of the credit accounts to go into delinquency.
According to Latoya Irby, a contributor to The Balance, a credit account might become delinquent when you’ve been late on making payments, you’ve maxed out that line of credit, or the bill have gone to collections. All of these things can do some damage to your credit score. But by rectifying these things through making on-time payments and paying down the amount of debt you have, you will be able to see your credit score slowly start to rise again.
Improve Your Debt-To-Income Ratio
As you pay down the debt you have, your debt-to-income ratio will improve. And as this number improves, your overall credit score will improve as well.
However, paying down debt isn’t the only way to improve your debt-to-income ratio. According to Casey Bond, a contributor to the Huffington Post, you can also improve this ratio by getting credit limit increases on the lines of credit that you currently have. If you’re able to get more credit available to use without increasing your debt, you’ll have a better debt ratio, which can help to improve your credit score.
Stop Applying For More Credit
Whenever you apply for more credit, there’s going to be an inquiry into your credit and then, if you get approved, a hit to your credit since you’ve now taken on more debt. Both of these things can decrease your credit score, which is the opposite of what you want to be doing when you’re about to apply for a home loan.
To avoid this, Natalie Issa, a contributor to Credit.com, recommends that you avoid having any hard inquiries into your credit as you prepare to apply for a home loan. This means that you shouldn’t apply for any other forms of credit right before applying for a home loan.
If you’re wanting to apply for a home loan soon, consider using the tips mentioned above to improve your credit beforehand and give yourself the best chance of getting a great rate.