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 has been my Realtor for 20 years. He provides excellent, knowledgeable, professional service.
Mark and Julie sold my rental property quickly and for more than I thought the property would sell for.
They are a great team! Joan Hurlock
Mark Knows his stuff!Michael
I like it that you don't "Hover" over prospective buyers. You are available but not clingy and I like that! Thanks so much for the Jakers Dinner Experience We are looking forward to it!
Harry & Flora Bokma
Mark and Julie are extremely Professional and Personable!James Osterkamp
Mark, Julie, Bob & Arlene,
We appreciate the great job of selling our home. This is the second property that Mark & Julie have sold for us. They are excellent to work with. Very thorough & professional, not to mention a wonderful family. We highly recommend Robert Jones Realty to anyone wanting an excellent & friendly real estate experience.Jo & Janet Freitas
Thank you so much for everything!Melanie Oakey
Julie is so sweet and amazing, she showed us so many houses until we found the one. Thank you Julie so much for everything you were so patient in our decision making. See you at the house warming party!Liz & Alex
I'am a broker in California & got licensed in Idaho , Julie did a great job and she is very ambitious!Susan Jensen
You are the hardest working people! We felt that our best interests were always a priority. It was a very smooth process. Pat & Lisa Donnelley
You Guys went way above my expectations!!! I can't thank you enough. Rob Bowman
Mark was outstanding. This can be a stressful process, but I could trust Mark from start to finish. He went above and beyond to ensure we sold our home. I'm so thankful for his time and expertise and highly recommend him to family, friends and neighbors. Rita Ruhter
Mark & Julies knowledge and large set of skills allowed us to sell our home quickly. Mark helped us quickly negotiate through the buyers concerns and reach a mutually beneficial sale. Terry & Tina Downs
Thank you very much! I appreciate all your help and advice with this sale. You went "Above and Beyond" when we had a few issues with repairs or problems with getting the buyer into the house. You are Awesome! I will definitely give you referrals!Annette Giles
Julie you were great with a good sense of Humor. Veronique Savary
Mark & Julie sold my mothers home after her passing. Thank you for making the process so easy & quick. I live out of state and everything was handled very respectfully and just as you promised. Beth Morgan