Thinking about buying a home, but concerned that your credit score isn’t where it needs to be? Not to worry; there are steps you can take to increase your credit score prior to buying a home—and increase your likelihood of getting approved for a mortgage in the process.
So what, exactly, are those steps?
A recent article from realtor.com outlined strategies potential buyers can use to boost their credit score in the months before purchasing a home, including:
- Check your credit report for errors. Credit report errors are common (according to data outlined in the article, 25 percent of Americans find errors on their credit report). So, before you purchase a home, it’s important to go through your credit report to check for any errors. If you find any, you’ll need to contact all three credit bureaus (Equifax, Transunion, and Experian) to get the error removed. Once the error is off your credit report, your credit score will be adjusted accordingly—a process that typically takes anywhere from one to three months.
- Pay down your balances. Credit utilization makes up 30 percent of your credit score—so if you want to boost your credit score (and do it fast!), paying down your outstanding balances is your best strategy. You can expect to see a change in your credit score the month after you pay down your balances (as your credit utilization will change).
- Open a new credit card. Adding a new credit card can also be a way to boost your credit score—both by increasing your available credit (which should improve your credit utilization) and, depending on the type of card you get (for example, a retail card), by diversifying your credit types. Opening a new line of credit typically takes one to two weeks to be reflected in your credit score.