So You Think You Can Buy a Home? How's Your Credit?

So You Think You Can Buy a Home?  How's Your Credit?

In today's real estate market it's safe to say that you need at least a 620 credit score.  If you aren't there there are a few things you can do to improve your credit score.

Review Your Current Credit Report:  It is important to get a copy of your credit report at least once a year. Identity theft is a growing problem as technologies increase.  Each year you are entitled to one free credit report from the three bureaus, Experian, Equifax and TransUnion.  Check to make sure that the information there is yours and not someone with a similar name or social security number.

Repair Credit Report Mistakes:  If you do find something on your credit report that is incorrect, your should dispute the item with the reporting bureau immediately.  All credit bureaus are required by law to investigate any disputed items within 30 days of the request.

Pay Your Bills On Time:  This is the most important thing to do.  If you are struggling to pay your bills on time, just make sure that you are not 30 days late.  Up to 30 days late isn't reported to the bureaus.  Juggle your payments if you are in a bind so that no account goes past 30 days late.  You will still have the late penalties assessed by the creditor but at least it won't affect your credit score.

Do Not Close Old Accounts:  Some people think that it is better to close old accounts that they aren't using.  This is not so, the longer an account has been opened the better your credit score is affected.

Keep Credit Card Balances Low:  It's a good idea to keep your balances below 50% of you available credit.  This means that if your credit limit is $500 you should have below a $250 balance.

Keep New Credit Requests to a Minimum:  Every time someone runs your credit, an inquiry is recorded.  If you are trying to get a loan, don't apply for new credit cards.

Don't Pay Off Collections Without Speaking to Your Lender First:  The bureaus may not have been recently reporting the item but when you pay it off they might!

There hasn't been a better time to buy a home in years.  If you would like more help on understanding your credit report contact a lender to help you!

If your credit score is above 620 and you are renting, there hasn't  been a better time to buy a home in years!  Start searching for a home right now!