Buying a home begins long before one starts the online search for the perfect place. It begins with thinking and planning how to finance that acquisition. The importance of one knowing their credit standing cannot be emphasized enough. Good credit can open the doors to home ownership while a bad credit rating can close them instantaneously. The first step you need to take is to know how you are rated, credit-wise. With this knowledge, you will be able to do what you need to, in order boost your credit your score or otherwise strengthen it. Here are nine steps to take to help boost your credit.
Get Your Credit Report
You cannot do anything without information. Get your report from each of the three credit bureaus for free. When you are armed with your report, you are able to look at it and see where weaknesses lay so that you can fix them. Without this, you have no knowledge of your credit score and so you cannot solve anything.
Fix those Mistakes
Take a good look at your report to spot any mistakes that may lead you to have a poor rating. Fix them as soon as possible. Within the report, there’s a step by step guide on how to fix the mistakes. Additionally, you can contact the bureau to get them to act on your issues, with which they should respond within 60 days. Some of these mistakes cost people eligibility to mortgage facilities and should therefore be addressed as early as possible.
Pay Your Bills on Time
Timely payment of your bills on a monthly basis will give you a clean credit report.
Maintain a Lower Balance
Keep your spending amounts as low as possible from the maximum limit of your credit cards. Financial experts say that you stand a chance of increasing your credit score if you can keep your balance below at least 50% of your card’s limit.
Pay More than the Minimum
If you pay more than your monthly minimum on your credit card bill, even by just a little, you not only improve your credit score but you also reduce the interest expense owed to you bank. This strategy will also help you to pay off your balance faster.
Pay Off Your Debts
Instead of simply moving the debts from one credit card to another card, just pay them off. Moving that debt to a new credit card company does not reduce it; in some cases it can actually give you an even larger burden of paying the hefty costs that come with the transfer. Consider making sacrifices to pay off the card instead; save some money and be debt-free.
Keep Your Credit Cards Open
Most people just want to cut up those cards once they have cleared away their payments, but this is not recommended. By keeping your oldest credit card accounts open and available, you will help boost your credit score.
Wait on the New Car
It’s not advisable to make big financial changes just before submitting your mortgage application. So, if you are planning on taking an expensive vacation or buying a new car and charging them to your credit card, you will be best served to wait. Banks are not big fans of big expenditures just before approval of a loan. It reflects on your spending habits and may cost you that mortgage.