I want to buy a home, what should I know about credit score?
Start now! Do these three things today to start building a credit score that will help you get the best mortgage rates when you’re ready to buy.
1. Order a free copy of your credit report and check it for errors. Make sure you dispute any inaccuracies and check it again in 60 or 90 days.
2. Pay your bills on time by setting up automatic payments or payment reminders.
3. Snowball your debt away. Make minimum payments on each account and send any extra money to the lowest balance. When it’s paid off, send that money to the next lowest balance. Keep this going and you’ll pay off you debt fast and make your credit score rise. (for more information about snowballing, contact a credit counselor)
Here are a few more tips for building credit.
- Pay off credit cards before car loans (revolving before installment loans).
- You will get a bump up in score by paying off a collection account but the ding on your report can stay up to 7 years.
- Sometimes, closing an account can be worse than leaving it open with a low or $0 balance.
- Closing a negative account won’t erase it from your credit report. Only time can do that. Try to keep the balance of your credit account at or below 35% of your total limit.
- Speak with a credit counselor or your lender for other ideas to help boost your score.