Credit score plays an important part in the home-buying process. Who does not love the idea of being a homeowner, but do you know you need a high credit score for that?

 

Homebuyers often struggle with the credit score but it can help you save money and make your financial life simpler if you manage to maintain a good credit score. Having a good credit score helps you get low-interest rates on credit cards and loans, easier approval for rental houses and apartments, and better insurance rates. 

 

So, here are 5 easy tips for first-time buyers to boost their credit score.

 

Credit Utilization Ratio:

 

We know how much we love pampering ourselves. Who doesn’t go out shopping as soon as they receive their salaries? The temptation to spend money on random stuff just follows us around everywhere. But be careful guys, this temptation might make things difficult for you.

 

The credit utilization rate is the amount of money you are spending divided by the amount of credit totally available to you. It is usually expressed as a percent. For example, if you have $50,000 in your account and your spending is about $25000, this means your credit utilization rate is 50%. If the rate is higher it negatively affects your score.

 

But the good thing is there is no fixed number, but keeping it under 30% is considered good and reflects a healthy impression. So, start saving more!

 

Correct Any Errors On The Credit Report:

 

Your credit report should be an accurate one. Late payments have a negative effect on the credit report. If there are any late payments shown on your credit report, have them removed. The process is an easy one. You can write a letter to your creditor explaining to him why you paid late and assure him that it won't happen again. If he agrees, he will remove the late payment from your credit report.

 

Don’t Worry! It's not illegal to have late payments removed from your credit report. But your creditor must agree on deleting the late payment. A creditor does have a right to investigate the payment in 30 days.

 

Be An Authorized User On Someone Else Credit Card:

 

If you know someone who has an excellent credit score. You can borrow that score from them. Isn’t that exciting! What you can do is, be an authorized user on that person's credit card. This means that a particular person will add your name to his account, so now his credit score will be your credit score.

 

As you know credit history affects the credit score, so if you are new you can give yourself a few years of history by using someone else's account. But make sure the primary account user makes his payments on time because now every missed payment will be shown on your report too.

 

Opening A New Credit Card Affects Your Credit Score:

 

When you apply for a new credit card, it can give your credit score a slight dip but for the short term. When you apply for a new card, a “Hard Inquiry” is required on your credit report because the lender would want to see your credit history. Hard inquiry damages your credit score. The impact is usually for a short period of time.

 

New accounts tend to lower the average account age and you don’t want that. So don't open new accounts too rapidly.

 

Keep A Close Eye On Your Reports:

 

You will never know what you are doing wrong unless you keep a track of your actions. The credit reporting bureaus allow a free credit report once a year. Frequently checking your credit report would be a wise habit. That way you can check regularly for the errors and have them removed. Also, the report would tell you what factor is affecting your score negatively so that you can improve that.

 

Remember a good report means better loan rates. If you do this regularly, by the time you plan to buy a home your score will be enough to get you a loan at a good rate.

 

Start using these easy credit boosting tips and it will bring up your credit in no time! Don't be disheartened if you have a poor score, there are multiple options for people who have a poor credit score. Visit Dealty today. We also offer home loan services.

 

Happy buying!