Are you ready to find yourself at home? We are ready to help you get there!
Not sure how to boost your credit score? Our team at Journey Home Lending is here to offer you tips about how you can improve your credit score before applying for a mortgage loan.
How Can I Raise My Credit Score?
While the minimum credit score you need is 580 in order to apply for a mortgage loan, the higher the credit score the better in terms of interest rate. Therefore, you want to do your best to get your credit score to the 700s, if possible. But how?
First, if you do not currently use a credit card, now is a good time to start. In order to have a credit score, you need to first have credit.
You can also ask to be an authorized user on someone else’s credit card. Make sure, though, that the person has good credit. If the person you choose misses payments, it can affect your credit score.
Pay Down Balances
If you do have a credit card (or two or three), you want to make sure you are not carrying high balances on them. Credit utilization plays a huge role in your credit score. Therefore, you want to make sure your balances are not too high.
If they are, now is the time to start working on paying off your credit cards. Start by paying the credit card with the higher interest rate off first and then move on to the next. This is called the snowball method, and it can be very effective in paying off credit card debt fast!
Don’t Close Accounts
This may seem counter-intuitive, but your debt-to-credit ratio plays a big role in determining your credit score. If you pay off an account and then close it, the amount of total credit you have decreases.
That means that your debt-to-credit ratio has now jumped higher, even though you didn’t add more debt. It’s better to keep accounts open, even if you don’t use them or use them only sparingly.
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