Getting a mortgage is an important step in the lives of many people and finding a home to buy is a very exciting time. Unfortunately, trying to get a mortgage with a bad credit score can be difficult and expensive. It is important to know the credit score required for a mortgage and do your best to get there.
But how can you raise your score quickly before applying in order to get the best rates and terms? With that in mind, let’s go over a few quick ways to raise your credit score before you apply for a mortgage.
Remove Negative Items From Your Credit Report
Perhaps the most affordable way to raise your credit score (and among the quickest) is to remove negative items from your credit report. While most credit reports are accurate, an error can always occur that can lead to negative marks on a report that can lower your score. These can be incorrect dates or amounts, an account that is accidentally closed, wrong limits or the wrong payment date.
If you don’t check your report at least once a year, it could be a mistake that is leading to your poor score. If you encounter something that you believe is a mistake, be sure to bring it up and get it fixed as soon as possible.
Pay Down Your Debt
Another good way to raise your credit score is to pay down your debt. If you carry a lot of debt, it becomes more difficult to get a mortgage. This is because one of the most important factors that lenders will look at when deciding whether to approve a mortgage is your debt-to-income ratio. This essentially looks at how much of your monthly income goes towards debt.
The higher this number is, the riskier it is to provide you with a mortgage as you have many others. If you dedicate a ton of money to other debts, the chances are higher that you may default on the mortgage. While you don’t need to be 100% debt-free to get a loan in many cases, the less debt you have, the better.
Get Added as an Authorized User on Established Accounts
This method involves essentially piggybacking on someone else’s good credit, but it can work to give a quick little bump to your credit. If you become an authorized user for another credit account, that account will show up on your credit report and influence your score. So if you have a friend or family member with good credit, who is willing to take you on, this can help.
You won’t need to use their credit or anything, but simply being an authorized user will allow for the information of the account to be reported on your report. Now, you aren’t the primary cardholder so the bump to your score may not be substantial, but it can still help.
Be Responsible With Any Credit
If you want to not only improve your credit score but learn to keep it high, one of the best things to do is to be responsible with your credit. Use it, but only on things you can afford and avoid the temptation to overspend. For example, you want to keep your credit utilization rate relatively low, normally under 30%.
This can show lenders that you can use credit without being irresponsible and are able to keep all spending in check. If you consistently spend a ton every month, there is a higher chance of an emergency occurring that hurts your ability to pay it all off.
In conclusion, these tips will be able to help you increase and improve your credit score quickly, and give you a better chance at a better mortgage.