Importance of a Good Credit Score
If you’re contemplating purchasing a home, especially if you’re a first-time buyer, you need to do everything you can to boost your credit score. This will make it more likely that you’ll qualify for a loan and will help you secure a lower interest rate. Below are a few steps to get you started:
- Get a free credit report. There are many free credit report websites available that will give you all of the information that you will need to get you headed in the right direction.
- Check your credit score. A score of 780 is excellent; however, you should be able to secure a loan with a score of around 720. If your score is low, you might want to consider renting for another year while you work to improve it.
- Ensure there are no errors. If a credit card company has you defaulting on bills for a card you never opened, you could be a victim of identity theft. Start working to have any errors removed immediately — they’ll be more difficult to fix the longer you wait.
- Pay down debt quickly and on time. Paying off your debt as quickly as possible and on time will help to steadily increase your credit score.
Working to maintain and improve your credit score will make purchasing a new home, or refinancing your existing one, much easier on your pocketbook and your sanity. Also, shop around and check with multiple loan agencies, such as a national bank, a local bank and a credit union because they might yield very different interest rates based on your credit score.