Let’s talk about a situation many homebuyers find themselves in when it comes time to buy a home. First, they get the idea that they are ready to buy a house. They start searching online and even stop by some open houses because they are just so excited to get started. Then they find a real estate agent to help out with the buying process (because we all know it is imperative to have a real estate agent who is in your corner helping you!) and the real estate agent, after listening to all of their wants and needs will ask if they have had the chance to meet with a lender yet to discuss their options and it is at this point many of my clients will let out a heavy sigh and say, see the problem is, I don’t have good credit, is that going to affect my ability to get a loan?
This is a common issue facing many homebuyers today, dealing with less then perfect credit. And while this is not a game-ending issue, I do encourage all of my clients to speak with an experienced lender who can set up a helpful program to help them get their credit where they need it to be to buy the home of their dreams. But besides getting help and guidance from a lender, I have also compiled a list of things you can do on your own as you prepare to start house hunting to get your credit to a good spot:
· Watch your credit card balances: A big factor that many people don’t know about is how much revolving credit you have versus how much you’re actually using. The smaller you can keep that percentage, the better it is for your credit rating.
· Eliminate credit card balances: If you take away the small balances you have on a number of credit cards, you will improve your credit score immensely.
· Leave old debt on your report: Many people believe that old debt on their credit report is a bad thing when in fact, if you have what they call “good debt” – debt you’ve handled well and paid as agreed – is actually quite good for your credit. The longer you can show a history of good debt history the better your score will be.
· Pay bills on time – This may seem like an obvious but many people simply don’t pay their bills when they are supposed to. One of the biggest pluses for a good credit score is simply month after month of on-time payments, that’s it.
· Open a secured credit card - A secured credit card is a type of credit card where you make a deposit into a checking account that “secures” the line of credit the bank or lender is extending you.
These are just a few helpful tips when it comes to improving your credit score but it is a place to start. Like I said, make sure you have a good lender to help you continue the process of improving your credit but it starts with you!