Have you decided that you're going to purchase a home this year? While getting your financial information in order, you've likely taken a hard look at your credit score. Maybe you're a first time home buyer. Or maybe you own you've owned your current home for a while. In any case, when applying for a mortgage, you'll want your credit score to be as high as possible for the best rates. If you think your credit score, could use some improvement, you're not alone. The national average credit score is 695 but those with a score of 740 or more will get the best credit rates.
There are some tips to increase your credit score that may help you reach the next credit threshold before you apply for your mortgage.
1. Pay of your debts. Credit Utilization, or the amount of money you can borrow versus the amount you currently owe, makes up 30% of your credit score. Pay down some of those credit cards and see your credit score increase.
2. Open a new account. If you open a new credit card account, you'll have two benefits. First, your credit utilization will increase. Second, it can help your credit mix, or different types of accounts. Remember that if you open several accounts, this can be detrimental to your credit score for having too many credit inquiries and the inquiry from the credit cards you do open will temporarily drop your credit score by about 5 points for a few months.
3. Pay your bills on time. You know that paying your bills on time will help keep your credit score healthy. But if you have a bill that's late, but not 30+ days late, pay it now. Most creditors won't report unpaid bills till after the 30-day mark.
4. Monitor your credit. If you don't already, monitor your credit before applying for a home loan. Should you find an error in your credit report, contact the credit bureaus to fight it.
5. Use your credit cards. And remember to pay them off each month. If you don't use your credit card for a specific period of time, often 6 months, the credit issuer may close your account.
If you are ready to purchase a home, we'd be honored to assist. We can set up a complimentary home search that will alert you as soon as homes meeting your criteria hit the Reno-Sparks real estate market. For more information, give us a call at 775-453-4568.