How to Improve Your Credit to Buy a Home

Buying a home is easier with a solid credit rating.

A good FICO score makes it possible to receive loan financing from a bank. And if you're in the market for a new home, it's advantageous to improve your credit before beginning your search. Your credit rating determines your likelihood of getting approved for a mortgage. Additionally, your rating decides your interest rate.

Things You'll Need

• Credit report
• Credit card

Instructions

1. Check your score and report. Obtain a free credit report from Annualcreditreport and order your personal credit score to assess your standing with the bureaus. The credit report is free, but you will have to pay for a FICO score.

2. Remove mistakes. Meticulously look through your credit report for mistakes such as unfamiliar accounts or reporting errors. Contact the bureau to have misinformation removed from your report.

3. Use credit. No credit history can impede your efforts to obtain a mortgage. Open a secured credit card with your bank, and use the card for inexpensive purchases like groceries or gas.

4. Pay bills. Do not miss or skip credit card or loan payments. Being late reduces your credit score and may result in a loan denial.

5. Get rid of debt. Decrease your debt-to-income ratio by eliminating credit card debt. Use extra money to get rid of these monthly expenses, or cut back on everyday expenses to save money and pay off debt.

References

• Bankrate: Tips to Boosting Your Credit Rating
• MyFico: Improving Your Fico Score