If you are close to applying for a mortgage, your credit score is probably already in pretty good shape in order for you to be proceeding. But you do need to make sure that you take steps to protect your score and keep it as high as possible during the home buying process. Following are some tips to help you do that.
1. Don’t fall behind on payments.
One of the most important factors in determining your credit score is whether you are current on your payments or not. This is not the time to slip behind, so be extra careful with your accounting as you are shopping for a home. Remember, setting up automatic online payments is a great way to ensure that you do not miss a bill.
2. Reduce your credit utilization or keep it low.
The lower your credit utilization is, the better. So if you currently are utilizing your credit to a higher degree than necessary, reduce your credit utilization to a minimum and keep it there for the duration of the home buying process.
This is something which homebuyers sometimes have a hard time remembering, because they may be shopping for expensive furnishings for their new homes. So just keep that in mind before you draw on credit to purchase a new couch.
3. Avoid opening new credit accounts.
If you apply for new credit, that will probably result in a hard credit check. Any time there is a hard credit check, that reduces your score. So make sure that you avoid trying to open new credit accounts at this time.
You should also stay away from any other type of applications which could result in a hard credit check. Soft or “alternative” credit checks are okay.
4. Keep old accounts active, even if you just paid them off.
If you have recently been focused on raising your credit score so that you can apply for a mortgage, you may have paid off some existing credit card balances. If so, closing those accounts may sound appealing to you at this time.
Avoid doing so, however, because aged accounts tend to boost your credit score. So if you close them now, your score could decline. Wait until after the mortgage has been approved.
5. Keep up with your credit reports.
Finally, if you have not recently ordered one of your credit reports, think about doing so again shortly before you apply for a home loan. That way, you can run one last check for inaccuracies and correct any errors you identify.
We Can Answer Your Questions About Credit Scores and Home Loans
At GoPrime Mortgage, we have helped many customers with a wide range of credit scores to qualify for affordable home loans in Alabama. If you have questions about how your credit score could impact your loan eligibility or are looking for further advice about maintaining your credit score or raising it, please call (256) 690-5132 or email email@example.com.