When considering buying a new home, it is important that homebuyers understand how significantly their credit score may affect mortgage rates. If potential homebuyers are in a bit of a pinch with credit as they look at committing to a new mortgage, it is important to be efficient and effective in improving their credit score as much as possible before committing to a rate.
These helpful tips can assist anyone in raising their credit score in a short period of time.
First thing's first: pay off those bills
The truth of the matter is that unpaid cards and bills are the most basic factor in anyone's credit score. Completing late payments and paying all outstanding bills should be the first step in working to improve credit score, as it is arguably the most obvious one. Credit.com noted that it is not absolutely necessary to entirely pay the bills off, at least make the minimum payment and do so on time. To maximize credit score, it is most effective for homebuyers to pay credit card balances down as close to zero as possible, while continuing to make timely monthly payments in the future.
Get rid of the negatives
Late payment records are especially hurtful to credit score. Along with checking for errors or incorrect information on credit reports, potential homebuyers can dispute negative information on their credit reports in an attempt to improve overall credit score. The Lenders Network outlined that the credit bureau has only a month from receipt of the dispute request to complete investigation; if there is no accurate verification of the account found by that point, the disputed record will be deleted. This can be done through an individual creditor or one of the Credit Bureaus.
Hard inquiries, made by any lenders whom you apply for a credit card with, remain on a credit report for two years and bring down the credit score. Along with limiting hard inquiries during the time of mortgage-searching, it is also possible to dispute credit inquiries. Though these tricks require some extra effort, they are highly effective if successful.
Associate with an exemplary credit score
Associating with a credit card account that has a positive history and great standing can be extremely helpful for any homebuyer, according to Credit.com. This means being added as an authorized user on such an account. Though authorization means a cardholder is allowed to use that account, simply being added to the account without using it in any way will help improve credit score. And not to worry, the original cardholder will not be impacted by associating with someone who has a lower credit score than them.
Credit scores are highly specific and highly sensitive. Understandably, they are a significant factor in determining the mortgage rate of any homebuyer. Thankfully, these quick tricks can be extremely effective for anyone who needs to improve their credit in a time crunch.