Buying a home is an exciting prospect, but there is a lot to think about and prep before you complete the process. If you are considering buying a home, be sure that you are taking the steps to keep your credit score as high as possible.
Pay Bills On Time
This will come as no shock, but on-time bills are key to keeping your credit score healthy. Credit cards aren’t the only thing that will impact your credit health. If you own a business and have a business credit card, your business activities can affect your credit history. Unpaid medical bills can also affect your score. If your hospital outsources to a debt collection agency, the debt collector may decide to notify credit bureaus that you’re overdue on medical payments.
Set Up Autopay or Payment Reminders
Autopay makes it easy to remember to pay your bills each pay period or each month. Since the bill is paid automatically, you can rest assured that you aren’t going to forget an important account. However, some pay period schedules make auto pay a little more difficult; consider setting a calendar reminder to ensure that you don’t miss anything crucial.
Avoid Closing Old Accounts
Your credit history and debt-to-credit utilization ratio are factors in your credit score. By closing a credit card account, you reduce your available credit, which can make it more difficult to hit that key debt-to-credit utilization ratio below 30%. Whenever possible, keep old credit cards open and just utilize them sparingly.
Be Cautious About Co-Signing
Remember that co-signing makes you responsible if the primary borrower should default on the debt. From a credit standpoint, co-signing a loan is no different than you applying for the loan yourself, so be sure to think twice before co-signing for a less-than-responsible party.
Reduce Credit Card Balances
Your debt-to-credit utilization ratio can play a big part in your credit score. Reducing your credit card balances can ensure that you aren’t using too much of your available credit. even with a healthy credit history and consistent loan payments, if you are using too much of your available balances, this can hurt your score.
Avoid New Lines of Credit
Hard credit checks do not fall off of your credit report right away. Avoid opening new credit accounts before applying for a mortgage. Multiple credit inquiries can temporarily lower your credit score and potentially affect loan approval.
