Having a bad credit score doesn’t mean you are out of the running to be a homebuyer. In fact, there are several ways you can work to improve your credit score. Begin by checking your credit report for accidental errors. The results of a small mistake, such as outdated or inaccurate information, can lead to a lower credit score. In fact, it’s estimated that almost twenty percent of Americans have some form of these errors on their credit reports and don’t even know it, so taking a moment to check for mistakes is definitely worth your time. When errors are reported and resolved, your credit score will go up.
Another great place to start repairing your credit is by focusing on small and regular payments. The quickest way to raise your credit score is to improve your payment history (which makes up almost thirty-five percent of your overall score). Making the minimum monthly payments on your accounts will do the job!
Try reducing the balance on your account wherever possible, as well. The more money you owe, the lower your credit score is likely to be. Take whatever money you can from your budget, even if it’s only a small amount, and begin reducing your debt. Every dollar you add towards debt reduction on your accounts will help to raise your score over time!
Lastly, resist the urge to cancel your unused credit cards. Every time you cancel a card, your score lowers. We recommend that you use these cards to assist in the steps above by charging one small item, like a cup of coffee or a recurring monthly charge, on the card and immediately paying it off.
While there’s no “quick-fix” or overnight solution for repairing your credit score, making a habit of following the recommendations above will result in improvement in the long run. If you have any questions or concerns about your credit score or your ability to take out a mortgage, get in touch with Highcrest Home Lending. We are here to help borrowers of all kinds find and purchase their dream homes!