Check your credit scoreYou can check your credit report for free once a year at annualcreditreport.com. Note, though, that there may be a nominal fee to receive your actual score along with the report. There are many similar websites, but many of them will charge you. Annualcreditreport.com is the site created by the three credit companies to provide consumers with transparent access to their financial information.If your score isn’t at the level you think it should be, there may be errors or inaccuracies that are dragging down your good name. Look for accounts you don’t recognize or balances that are not up-to-date. You may even catch an identity thief red-handed! The report comes with instructions for challenging any item. In most cases, you can leave a note for lenders in the file explaining the item under dispute.
Boost your credit score!There are no simple tricks to bump your credit score in advance of a mortgage. You need to develop a six- to 12-month plan to boost your credit score before getting your mortgage by making sound financial decisions. Demonstrate to lenders that you can use credit responsibly, and your score will increase.One of the biggest drags on a credit score is percentage of utilized debt. If you’re carrying a balance on credit cards, this tells lenders that you may be using credit to pay for your day-to-day expenses, and that lending you more money would not be a smart move for them. Getting balances to zero should be goal number one!Also, take care that you don’t make any major purchases using credit right before you attempt to qualify for a mortgage. Even if you’re expecting a major windfall, such as an overtime check or a tax refund, creditors don’t see that on your report. Hold off until you have the cash in hand before you splurge on a new TV or car!If it’s a lack of credit history that’s hurting your score, many lenders offer “credit builder” loans. These involve borrowing a small amount of money and making regular installment payments on it. Parents can frequently take out these loans on behalf of children to help them build a stronger credit history.
If your credit score is low, and there’s nothing you can do about it, you may need to take other steps to get a better position on a loan. You might try boosting your down payment or shopping for less expensive houses, so you’re borrowing a smaller sum of money. A co-signer, another responsible party willing to take on the risk of the loan, can also improve your terms. If your debt is a serious problem, perhaps moving into a new house isn’t a good short-term priority. Focus instead on paying off debt and saving up for a down payment. This can keep you from getting stuck with a house payment you can’t afford before you’re ready for it.