How to Boost Your Credit Score to Get a Home Loan
When it’s time to buy a house, you might be surprised when you pull your credit score. This number can determine a lot of things when it comes to buying a house. It can determine the interest rate, the type of loan you can get, and even how much house you can buy. If your credit score is barely grazing good, it might be time to boost your credit score. Simply getting loans and paying on time may not be enough. Depending on your complex financial history, you might need to do a few extra things. Additionally, if you’re still young, without much credit history, getting a loan is precisely what you’d want to do.
Get an Installment Loan
If you need to begin your credit score, an installment loan is a great place to start. While there are many different ways to approach this, you’ll find that Missouri installment loans are some of the best. They offer easy terms, low loan amounts, and a quick way to boost your bad credit when you need it most. These loans can be used for almost anything from repairing a car to buying a new computer to work from home. Plus, when you pay on time and then pay it off, you provide evidence of your reliability when it comes to lending.
Pay All Your Bills on Time
Even if it won’t get reported to a credit agency right away, it’s vital that you pay all your bills on time. This habit is the simplest way to keep your credit score up, and to ensure you’ll always remember to pay your things on time. This guarantees that you don’t incur late fees, higher interest rates, and a ding on your credit score or credit report. This habit shows your creditors that you are reliable and can be trusted to pay on your debts.
Pay Off Credit Card Debts
There are multiple takes on this one, but it is important to improve your debt-to-income ratio if you want to boost your credit score. If you have a lot of revolving credit like credit cards, it’s helpful to work on paying down or paying off these debts. You can work with a professional to determine how many of these you should close out and which ones you should keep open, but in general, you should probably close out all your store credit cards. These are seen as higher risk credit and typically have high interest rates already. You can even consider a consolidation loan especially if you want to reduce your interest rates and put your debts into one easy payment.
Ask For Bad Debts to Get Removed From Your Credit Report
Did you know that you can ask the credit reporting agencies to remove bad debts from your credit report if you’ve paid them off? There are other situations where you can do this as well, but you typically need to ask for the debt removal in writing and provide evidence that they are paid in full. By removing these bad debts, you’ll boost your credit score by sometimes as many as 30-50 points.
Correct Credit Report Errors
In addition to bad debts, did you know that there might be other errors on your credit report? Maybe you paid something off, but the credit reporting agency shows that the account has been defaulted on. Perhaps it shows debts that aren’t yours, or maybe you even have open accounts that you thought you closed years ago. By correcting these credit report errors you can easily improve your credit score. It takes some time and sleuthing, but when you’re trying to buy a home, it’s worth it.
Doing all these things the moment you want to buy a house can prove to be ineffective. You’ll want to plan ahead by at least a few months if you’re planning to get a home in the near future. It’s important to avoid getting new large debts like car loans right before or during the home-buying process. This can keep you from closing on your house. Mortgage lenders don’t like new debts that change your debt-to-income ratio. They like the stability of people who pay on time each month, have a moderate debt to income ratio, and who don’t go buying RVs right when they want to buy a new house.