Credit scores can impact many areas of your life – including buying a home. Not only do credit scores show lenders your ability to pay your bills on time, but how much debt you currently have and could potentially carry. According to the credit reporting agency, Experian.com, a credit score of 700 and above is considered “good,” while anything in the 800 range is considered “excellent.”
A high credit score can pave the way to a relatively painless loan approval. So, it’s important to have this built up by the time you start looking at homes. Building good credit can sometimes feel overwhelming and hopeless, but there are a few things you can do right now to build up your credit and improve your scores surprisingly quickly.
Obtain Your Current Credit Report
The first step is to obtain your credit report and evaluate it. The three major consumer credit reporting agencies are: Transunion, Equifax, and Experian. You can get one free report from each agency — which is recommended, as it is possible to have different information recorded on each individual report.
Resolve Any Errors or Collections
Once you get copies of your credit reports from the three agencies, it’s important to review them and see if there are any errors. You will want to contact both the company that provided the incorrect information on your account, as well as the credit reporting agency to dispute the errors.
Pay Down Existing Credit Balances
Credit scores are calculated using several factors, with existing credit card debt accounting for almost 30% of your overall score. If you are carrying a large amount of credit card debt, paying those bills down can be one of the most significant ways to improve your credit quickly.
Put Bills On Auto Pay
Paying bills on time is crucial to maintaining good credit. When you have your bills on autopay, it’s one less thing to remember! The best credit scores build slowly over time with solid payment activity.
Open New Accounts
Opening a bunch of new accounts at once can actually be detrimental to your score. But strategically opening a new account here and there can boost your score if you manage them correctly. Remember it takes about six months to see effects of new accounts.
If you have any questions about building your credit or loan approvals, please let me know! I have a trusted network of professionals that I work with on a consistent basis that can help you with this process!