It’s important to have a strategy on how to boost your credit score several months before applying for a home loan. The best mortgage rates and best terms are usually given to buyers with the highest credit score. Note that your down payment may not guarantee you a home loan if you have not built your credit score. The good news is that we have listed for you the tips you can use to boost your credit score and stand a better chance of getting affordable interest rate loan.
- Check for errors in credit reports
You are entitled to get a free copy of your credit report annually from the credit bureaus. You need to check for any error in the credit report which could cause damage to your credit score. The errors you discover are subject to correction by the credit bureaus after investigation within a month.
- Pay your bills on time
Paying your bills on time is a major factor in the credit score boosting that contributes an average significant percentage of the score. It not only involves the payment of the credit card bills, but also the loan payments.
- Asking for forgiveness.
Any single late payment of your bill is able to pull down your credit score but you may be lucky to get mistake done away with by asking the creditor to do so. By goodwill deletion, a creditor may choose to remove the information regarding your late payment information depending on your history of payment with the company.
- Eliminate credit card balances
Credit card debts have more impact on your credit scores compared to other debts such as the auto loans or student loan. You therefore need to pay down your credit card debts to raise your credit score. The credit score is usually based on your credit utilization and debt-to-income ratio.
- Don’t close your old accounts
Closing your old accounts won’t be of good impact to you since it will make your overall account length shorter which in turn reduces the credit score. 15 percent of your credit score in accounted for by the of your credit history.
- Avoid opening or applying for new credit cards
Your lender can observe the credit inquiries which imply that other lenders had asked for your credit history and this will mean you are about to add a new debt. This may mean paying your bills on time might be a challenge and therefore reduce your credit score.