Your credit score is that number calculated from your credit report which helps lenders determine whether you’re a good investment for them. Basically it is one of the factors that will determine whether you get approved for a loan or not, and also what kind of rates you get on the interest which determines your monthly payments. Credit scores don’t improve over night, so it is important to maintain a good credit score, rather than just start thinking about it when you’re Buying a New Home, and here are a few ways to do this:
Keep your credit low
One of the things that affect your credit score is how much credit card balance adds up each month. High balance shows you have been taking a lot of credit and this affects your score negatively. You may be making payments on time, but this may not mean much if the bill is high. This is why it is smart to pay off your bills in the middle of the month as well so it doesn’t rise too much at the end.
Close down extra accounts
A lot of people have many small accounts littering their credit reports, which can lower your credit score considerably. These small nuisance accounts are easy to pay off, and even though the amounts are small they can reflect badly on your score, so try and pay them off to clean up your report, and keep one or two go-to cards for all your payments.
Keep good debt history in your records
If you have a really good account where you made on time payments and maintained a good record, don’t try to get this off your report once it’s closed. Good credit history always works in your favor, and shows that you are trustworthy as a borrower. If you got an A in a class you took in high school, you wouldn’t want to get rid of the proof now would you?
Bunch up your loan shopping
Credit score calculators like FICO tend to count all loan applications made within a certain time period as one application. This is to help people maintain their scores when making multiple applications for the same loan. This is why it is smart to do all your loan shopping within the same time period, whether it is for a car, mortgage for a new home, or a student loan, so they will be counted as one application.
Make payments on time
The best and easiest way to maintain your credit score is to just make good clean on-time payments for all your bills. Sadly, a lot of people start skimping on payments when saving up for a big home purchase, but the truth is this can really hurt your score and reduce your chances of getting a loan at all. You need to show you’re an upstanding citizen and that you will make your mortgage payments on time, and this is a good way to do it.
Improving and maintaining a good credit score is not as difficult as it seems. These are just a few tricks to know and habits to develop that can get your credit score to rise and stay up, and when are Buying a New Home you will easily get that awesome interest rate you need.