Are you trying to buy a home, but your credit score won’t allow you to do so?
Well, here are over 5 ways to fix that quicker than you think!!
(Keep reading because this could change your life).
As a Realtor I meet so many clients and potential clients who say, “I want to buy a house, but my credit score is too low so I can’t,” and, here is the thing, it is easier to get around that than you think, and I’ve helped a handful my clients already do this.
Now, there is the long route which is to work for a couple of years to build your credit up by making more transaction on credit (buying something on credit and then paying it down on time) which is the most used way, but there are SO many more options for you.
Now, before we go too far on this, what kind of credit is even required to purchase your new home?
Well, let’s start with renting requirements. To rent most places want you to have at least a 580 credit score.
To buy a home (get approved by a lender) they normally require at least a minimum of 620, but higher is better. If you are above 720–750 you’ll pretty much get approved at the best rates.
(Having above 800 is amazing and can help a lot, but is more of a “status” goal).
So, how do we raise our credit promptly?
Well, wait no longer, here are over 5 ways to do so.
0. The first “step” is to know where you currently stand based on your credit score. There are three kinds of credits, but we normally use FICO to determine loans.
Some banks will have an app that lets you check them for free, and Credit Karma is also a great resource to use that is not only free and it doesn’t affect your credit score adversely.
1. Call to dispute credit report errors.
Negative remarks on our credit score will normally fall off after seven years and you can have these disputed if they are still on there for some reason.
However, you can also call and dispute ones within the past 12 months to 30 days if they can take off these negative remarks which could raise your score a fair deal.
2. Pay down debts tactfully.
Let’s say you have two lines of credit (it could be to credit cards. A boat. Car, or you know it), and one has a high debt utilization ratio of above 40%, and another one is around 8%.
Instead of paying down the lower one first, you could pay down the higher one which will make your FICO raise, and release some of the high ratios you currently have.
3. Don’t close off unused credit cards.
Many people will say that why to have a credit card if I never use it, but this will make your account look healthier and help your debt-to-income ratio which will not only raise your credit but also give you a larger pool to play with.
You can even call them once a year and tell them that you’re not happy with the rates and that you want 0% and since I never used this card I’ll just go with someone else if you don’t allow me to have this (this does require some negation and higher credit scores if it wasn’t purchased during the promotion in the first place).
4. Ask to have your credit limit raised (only good for those who have controlled spending habits).
This will allow you to have utilization ratio goes down which will boost your credit report.
5. Pay your bills on time. (The most commonly used route)
This will also help you raise your score.
And since I’m all about giving you the royal treatment, here are three more options.
6. You can get a secured line of credit.
This is great if you are starting from scratch and wanting to raise (Create) your score. It’s money that you pay into your bank and they call it “credit” that you’re paying to yourself which will help you raise your score.
7. Mix up your credit usage.
This only accounts for around 10% of your score but that can make a big difference. If you only have loans open up some credit, and vice versa.
8. Partner up with great Realtors and lenders.
Not every Realtor or lender are made the same.
Some understand more or less on how to help you, and what creative ways to apply in your home purchase.
One of my lenders has an amazing program that helps boost people’s credit score in the double-digit super quickly.
(Some people with lower credit scores could potentially even raise by 100 points fairly quickly with all the above options).
There are a lot of ways to raise your credit score to help you buy a house to call home, and since I’m a Realtor I do suggest you talk to a specialist about this, but these are great ways to boost your credit.
If your ready to purchase your new home, or want to get that ball rolling let’s connect to see how we can help you do that!