Improve Your Credit Score to Become a Home Owner This Year

Raise Your Credit Score and Become a Homeowner by the End of the Year

There are plenty of things to consider when buying a house: how many rooms do you want, what neighborhood you like, should it have a yard or not, and most importantly how much can you afford. Let’s face it not many of us have the cash to pay for a home, most of us need to ask for a mortgage loan. To get a loan, you have to meet several requirements, including having a high credit score. If you genuinely mean to buy a home by the end of this year, you need to work on boosting your credit score to get a better loan. Here are some tips that will help you improve your score and get that home in Mesa County.

How the Credit Score Gets Calculated

First things first, to raise your credit score you need to understand how it gets calculated. There are five factors that credit bureaus consider to determine credit ratings.

1. Credit utilization ratio: This is how much of your available credit you are using. You should always try to maintain your utilization ratio lower than thirty percent. This factor is worth around 30 % of the total score.
2. Payment history: Your payment history counts for 35% of your score. Your history reflects how punctual and responsible you are with your payments.
3. Credit history length: If you pay your bills on time you’ll have a better credit history, and it can work in your favor. Candidates with a long credit history are held in higher esteem by lenders than people with one-year credit history. This factor counts for 15% of your rating.
4. New accounts: Lenders consider the number of accounts you own and how recently you opened them. If you recently opened several accounts at the same time, you send out a message that you highly rely on borrowed money for all your expenses. Many new accounts don’t look good, and they count for 10% of the score.
5. Debt mix: Credit card accounts, student loans, and car loans are not the same. Credit bureaus consider the different types of debts you have. The debt mix is worth 10% as well.

Tips to Improve Your Credit Rating

Learn About Your Current Credit Score

To improve your credit score, you need to know what you’re working with. You’re legally allowed to request two free credit reports per year from TransUnion, Equifax, or Experian. Print out your report and examine it carefully. Perhaps some mistakes might be lowering your score that you should fix immediately. The report will indicate where you can dispute errors if you find any.

Pay Off a Large Part of Balance

Yes, it’s not easy to pay off a large part of your balance, or at least it seems that way. If you own multiple cards, it’s much simpler than you think. Start by paying off the smallest balances and stick to using only one or two cards. Your credit balance increases your credit utilization ratio, even if you don’t use your card. You should preferably keep your credit utilization ratio under thirty percent. If you need to find some extra money to pay off your debts, consider a garage sale. Selling some of the excess stuff you no longer use will make it easier to pack everything once you’re ready to move to a new home. You’re aiming to lower your balance and utilization ratio to get a better deal on your mortgage loan. You can get ahead in the mortgage process and look into getting title insurance for the home you’re interested in. Most mortgage lenders will ask you to get title insurance to protect their interest in your new investment. Call Advanced Title Company at (970) 255-7677 to begin your title insurance process.

Increase Your Credit Limit

You can also call your bank and request a higher credit limit. If you keep spending the way you usually do, you can reduce your credit utilization ratio. Just don’t go crazy with your spending only because you have access to more money.

Reach an Agreement With the Bank

There is no way to make your bad credit disappear, but you can talk to the bank and negotiate with them to have it removed. You can convince them that you will pay off your remaining balance if they agree to remove your bad credit. Make sure to settle any deal in writing before you start making payments.

 Get Title Insurance for Your New Home in Mesa County

Once your mortgage lender agrees to a loan, you can start crossing off some of the requirements on their list. If they ask you to get title insurance for the property, you can call Advanced Title Company at (970) 255-7677 to request it.