Are you looking forward to making that first leap into adulthood? Is it time to start looking for your dream home? Whether you’re looking for your first home or your dream home, you will need to tackle your finances first.
If the thought of check your credit score leaves you wanting to run for the hills screaming, then don’t worry, we’ve got you covered. Keep reading to see what your credit score is all about and how you can start to improve your score today.
Buying a new home can be a scary and exciting new adventure all at the same time. But with a little homework and changes to your financial habits, your credit score shouldn’t be scary.
Keep reading for everything you need to know about your credit score, including what to do to ensure you can start packing up to move into your next home adventure.
What Is a Good Credit Score?
Depending on your financial situation and money choices you’ve made in life, your credit score could be a sensitive subject for you. But if you want to buy a house, prepare to have your entire financial life looked through with a fine-toothed comb. And this includes your credit score.
A good credit score will get you further in your search for your next dream house. But what is a good score?
It can be difficult to determine what is the highest credit score, the FICO model uses 850 as the highest. But you won’t need this to get a home mortgage. A good score falls within the range of 700-800 on the FICO scale.
How to Check Credit Score?
You can check your credit score once a year for free with each of the three major credit bureaus. If you’re planning to buy a home, or refinance, sometime soon then it would be advantageous to check all three.
Otherwise, for maintenance purposes, it is wise to spread each free check out over 12 months and check once every four months for free. This way if something happens, you see it sooner rather than checking all three at once but only once a year.
Several companies will offer to check your score for a fee. But with a little leg work of your own, you can check your score without paying. It’s smart to keep your eye on your score regularly in case there are any discrepancies or inaccuracies.
How to Improve Credit Score?
Your credit score can fall anywhere within the range of 300-850. As a general rule, if you want to buy a house, you will need your score to be over 620. However, some FHA and USDA loans will allow you to finance a mortgage with a score as low as 580.
Keep in mind that the lower your credit score, the higher your percentage rate will be. So it is essential to learn how to improve your credit score before you apply for a mortgage.
Several factors contribute to your score. You will need to improve your financial habits in all areas to see your credit score improve. Also, be patient, it can take a long time to improve your credit score.
Dump the Debt
Your debt-to-income ratio plays a large role in your credit score. But decreasing your debt load you will see a marked improvement in your credit score. So skip the takeout, pack a sack lunch, and spend every spare cent to pay down your debt.
Stay Away From New Credit
As you improve your credit score you will start to notice lenders sending you enticing offers for new lines of credit or credit cards. Avoid these and keep your eye on your long-term goal of buying a home. There will be plenty of time later to finance that dream trip to the tropics.
Don’t Shy Away From Your Initial Terms
While some well-meaning friends and family might encourage you to wait until your terms are perfect. But, the fact is they might never be perfect. You will be continually improving your credit long after you purchase your first home.
So, if the rent prices in your area are skyrocketing, then it might be worth it to jump into your first home as soon as you can and then refinance down the road after you’ve built some equity and further improved your credit score.
Start Packing and Get Excited About Your Next Adventure
Signing a 30-year mortgage can make even an ex-Navy Seal start to sweat. But, not you. You’ve done your research and you know what you need to do to ensure you’re ready to sign a mortgage.
Don’t back down in fear at the idea of checking your score. It’s just a number, and it’s a number you can fix. So head over to check your free score today and then follow the steps listed above to improve your score.
With the right information and a great credit score, you’ll be ready to move into your dream home in no time.
If you still have questions about whether or not you qualify for a home mortgage, reach out to us today. We love to talk about mortgages and will give you the best information for your situation.
As a direct lender, we have more options than your traditional large bank or other financial institution. So, if you want personalized service and honest credit and financing information then let’s talk.