Improve your Credit Before Buying a Home by William Condiss
Today's mortgage lenders care about one number more than any other your credit score. If this figure is high enough lenders will give you a mortgage loan that comes with the best interest rates. If it s too low they won t give you any mortgage at all.
Your credit score also known as your FICO score is way for mortgage lenders to quickly determine how well you've managed money in the past. A credit score sums up how often you pay your bills on time. It s a barometer on whether you misuse your credit cards. It also includes any bankruptcies that you've filed in the past.
If your credit score is good one one that is above 700 most mortgage lenders will approve you for a loan with the lowest possible interest rates. But if your score is weaker one though you might still receive a mortgage loan you ll certainly be forced to higher interest rates. Lenders do this to shield themselves form extra risk they taken on by lending money to borrowers who have a history of missing payments.
Fortunately you can boost a weak credit score. This takes time though. Despite what you may hear from companies in radio TV commercials there is no quick way to erase bad credit. Improving your credit score takes time effort.
The first step in this process is to order copies of your credit report form three bureaus that maintain credit scores Experian TransUnion Equifax. Scan these reports carefully looking for any errors. If you find any contact the bureau to report the mistake.
Erasing these mistakes from your report will help your credit score. Don t expect this process to move quickly though. The credit bureaus take a long time to remove errors.
If you find no errors you ll then have to take on the real hard work improving your own financial habits.
First make sure to pay all your bills on time. Also pay off the outstanding balances on your credit cares. & once you do close most of your accounts.
Taking these steps will gradually boost your credit scores. A better score though won t happen overnight. It takes time to erase bad financial habits. That s why there s no quick way to improve a credit score.
If your credit score is currently weak it might make sense to wait for a year or more before applying for a mortgage loan. That will give you the time you need to establish the healthy spending habits that will boost your credit score.
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