So you want to purchase a home. You have your down payment saved up, but you don’t have the other hundreds of thousands of dollars just laying around to submit a cash offer. In this case, your best option is to get a loan. You have decent credit that can get you approved for some kind of loan, but one with high interest rates and hefty down and monthly payments. So what can you do to get a better situation? Below we have some great tips to help you raise your credit before purchasing your home!
IMPROVE YOUR PAYMENT HISTORY
Credit is your trust score. It tells lenders how much they can trust you to pay them back. Late payments remain on your credit for up to 7 years, so trying to minimize them is important because payment history makes up roughly 35% of your credit score. Late payments can lead to more serious things on your credit such as collections, repossessions, foreclosures, etc. We know what you’re thinking, you can’t change the past. You may have skipped out on some payments a couple months back, or already have some collections. A couple things you can do to ensure you make your payments on time for now on is putting your bills on autopay. In some cases, companies give you a discount for doing this so, so it’s possible to save some money at the same time. Now although this option would guarantee that you pay them on time, you want to make sure that you always have the funds in your account for them to pull from. So another thing you can have along with autopay, is putting all of your bills on a calendar; that way you know what paycheck would go to what bill and when you can expect them to withdraw from your account.
PAY OFF DEBT
Another thing that determines your credit score is how much money in debt that you have. Even in cases where you may not have that many credit cards, and the only other thing on your credit is 30,000 in student loans, having a high amount to pay back will hurt your score as well. A great thing you can do about this is negotiating a monthly payment plan with lenders that you can comfortably manage. Lenders also don’t want to write off your account to a collection agency because it is extra work on their part, so they will be open to negotiating with you to come to a mutual agreement. Your debt will also be split into the type of debt it is, whether it is an auto loan, or credit card debt or a collection. Make sure you are putting money into each section at a level you can comfortably handle to raise your credit every month.
REPORT ANY DISCREPANCIES ON YOUR CREDIT REPORT
Analyze everything on your credit and ensure that everything is correct. Any hard queries or reported late payments that are incorrect should be reported immediately. The lender has 30 days to show proof of that report and if it isn’t provided, they drop it off of your credit. This can help boost your credit immensely. For this tip, another helpful thing is requesting a rapid rescore. Once you pay off, let’s say a large collection, ask for a receipt and call the credit bureau directly to request this. Knowing what speak to and all the logistics can get complicated, so investing in a credit repair company may also be a great option with this.
GET ADDED AS AN AUTHORIZED USER
Have a friend of family member that always pays their credit cards and other bills on time? Ask them if they can add you to their credit card as an authorized user. When you do this, the information for that credit card or loan will be reported on both their credit report and yours and this will not hurt them. As long as they continue to pay that bill on time, it is a win-win situation for both parties. It will help even more if the credit history you’re added to has a squeaky clean credit history, so be strategic in who you ask. Just keep in mind that any payments that they miss on that credit card, will make you suffer the consequences as well.
Have a friend of family member that always pays their credit cards and other bills on time? Ask them if they can add you to their credit card as an authorized user. When you do this, the information for that credit card or loan will be reported on both their credit report and yours and this will not hurt them. As long as they continue to pay that bill on time, it is a win-win situation for both parties. It will help even more if the credit history you’re added to has a squeaky clean credit history, so be strategic in who you ask. Just keep in mind that any payments that they miss on that credit card, will make you suffer the consequences as well.
