TIME TO EARN SOME CREDIT EXTRA
The higher the better
Once you decide you’re ready for homeownership, it’s a good idea to check your credit score, as it will largely determine the terms of your mortgage. If your score is lower than you’d like, put off purchasing a home until your credit score rises. With a few strategies and a commitment to smart money management, you can boost your score and save yourself a lot of money in the long run.
FIND YOUR SCORE.
Determine your credit score by obtaining a free credit report from one of the three main credit bureaus. Just go www.annualcreditreport.com or call 1-877-322-8228. Credit scores range from 300 to 850; a score around 700 is considered good, while anything above 720 is excellent.
DON’T CLOSEOLD ACCOUNTS.
Part of your credit score comes from how long you’ve had credit, and the longer a card is open, the higher your score will be. Many lenders want you to have at least three credit lines that you’ve had for at least a year. Keep old accounts open; they can help boost your score and balance out newer lines of credit.
PAY DOWN YOUR CREDIT CARD BILLS.
Start by paying down your card with the highest interest rate first, and aim to get all balances below 50% of your credit limit. Since 33% of your credit score is based on the amount you owe, work on relieving your debt in any way that you can.
DON’T OPEN NEW CARDS THAT YOU DON’T NEED.
Avoid opening new cards at department stores or gas stations, and remember that new cards can bring down the average age of your credit, lowering your score even more. Stop applying for new credit a year before you apply for a mortgage, and don’t apply for new credit again until after you’ve closed on your home.
