Here’s how to clean up your credit so you get the least-expensive home loan possible.
Image: Rob Daly/OJO Images/Getty Images
Boost your credit score by paying the balance on your credit cards in full, and on time, every month. Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.
1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. Access all three versions of your credit report at www.annualcreditreport.com. Review them to ensure the information is accurate.
2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.
3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.
4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.
5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.
6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.
7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.
G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Mark & Julie were a pleasure to work with in every aspect of a decision in getting our properties evaluated, listed and Sold. Very knowledgeable of the real-estate business and supportive in helping us to meet our end goals. I would highly recommend Mark and Julie Jones and Robert Jones Realty, Inc.Stephen & Lana Olsen
Thank you to Mark and his staff! They did a great job of selling our Lot and we are very happy with the service they provided! Mark was very informative and a true professional!!Fernando & Carrie
Marks make the process FUN! Kumbaya!Connie Bell
Mark & Julie were absolutely amazing. They took the time to really help us look for what we wanted and helped us stay patient until we found "the one"! We could not love our home anymore, it's everything and more that we wanted and we owe it all to them!!! We highly recommend them to everyone! Thank you for your time and all of your help along the way you guys!!Sam & Kelbie Ross
Mark & Julie were easy to work with & explained everything so we could understand. Would use the again!
THANKS SO MUCHBill & Lisa Colwell
This was the 3rd home we purchased in the last 10 years working with Mark. We would not consider working with another Realtor. We trust Mark unconditionally. He and Julie patiently showed us dozens of homes before we found the one we wanted. Mark also went beyond what he needed to do in helping us in the sale and closing of our previous home to our son. It has been an absolute pleasure working with Mark & JulieDon & Connie Johnson
Awesomeness!!Ben & Pam Pena
We were very impressed with your integrity, experience, knowledge and follow through.
Thanks Mark & Julie JonesSteve & Lana Olsen