According to the Federal Reserve Bank of New York, anyone who purchased a home in the final quarter of 2020 had an average FICO score of 786. If your score doesn’t measure up, don’t worry. Having a lower score doesn’t necessarily mean that you will be out of the market, and it is possible to improve it through several steps.
This blog post will shed light on possible ways to boost your FICO score and give you better chances of buying the home of your dreams.
Mortgage 101: Easy Tips to Help You Boost Your Credit Score
Improving your score is often a multi-step process. It will require you to change some behaviors and develop positive financial habits. Here is a list of tips to help you improve your score.
1 – Check your credit history
Make sure that all information on your credit report is reported correctly. If there are any errors, dispute them. If you have open accounts that haven’t been closed, close them.
2 – Pay bills and loans on time
Banks, lenders, and credit reporting agencies see accounts that are delinquent or past due as signs of an unstable financial situation. It is best to pay all financial obligations on or before the due date and in full.
3 – Lower your credit utilization ratio
Pay off balances on your credit cards, or else close them. Interest rates on many credit cards can be as high as 30 percent. You don’t want to be stuck in that kind of debt.
4 – Get a credit-builder loan
A credit-builder loan is a secured loan that has a lower borrowing rate because it is backed by money in a savings account. You can also set up automatic payments to your creditors so that your credit utilization ratio is always low.
5 – Become an authorized user on someone’s credit card
If you don’t have a credit card, start with a secured credit card. Then, be sure to pay the bill on time. This can help boost your credit score. If you have no credit cards, then ask a family member or friend to add you as an authorized user. Their good credit history will help increase your credit score.
Why Improving Your Credit Score Matters
In the coming months, you may be looking for the best mortgage rates for the home you want to buy. If your credit score isn’t good, you may not qualify for the best rates. Improving your credit score may take time, but the effort will be worth it. Always remember that ignorance is never an excuse for poor credit. When you know more about building and repairing your credit, you can take the necessary steps to fix an issue that may be holding you back.
If you have a low credit score and are struggling with buying a home, don’t worry. If you work diligently to improve your score, there is a good chance that you could soon be in the market for your dream home. And with so many loan options available, even a poor credit score shouldn’t stop you from realizing your home-buying dreams.
You are the hero in your homeownership story! Waymaker Mortgage specializes in making way for successful homeownership through home purchase financing and refinancing with low rates and low fees. We service multiple markets around the United States. Book a call with us and apply for a housing loan in Texas today!