If you have a spotty credit record that looks more like a slice of Swiss cheese, then you may have a bit trouble finding a mortgage. However, it’s not the end of the world as you can always improve your credit score. It sounds impossible but here are a few tricks to get you started.
- Know Your Score – The first way to get you prepared mentally is by knowing where you stand on the credit score spectrum. It’s a great idea to also know things such as your spending habits and how it affects your score. In addition to knowing your score, you should get an idea on how it works. Your FICO Score Breakdown is a great way to get started on understanding your score:
FICO Score Breakdown:
35% – Payment History
10% – Types of Credit
10% – New Credit
15% – Credit History
30% – Credit Utilization Rate
- Fixing Errors – Being diligent with your paperwork can be a very crucial and shrewd step in improving your score. Resolve any errors as soon as possible and just double check everything is coming up correctly. In addition to contacting your credit bureau and information provider, make sure to eliminate any disputed accounts and to keep an open credit to credit used ratio very strong. Dispute any errors and make sure to note the reasons why to both parties. Closing an account however can even impact your credit score even before a mortgage loan.
- Pay On Time – Paying on time may be the simplest and easiest way to not only improve your score but to strengthen it as well. Keeping a positive payment history and paying down any credit card debt is a great way to improve your score.
- Credit Use – Using credit wisely will allow you to manage your home money flow in addition to getting better rates in general. In addition only apply for credit when you need it, that way you avoid adding to your debt.
It’s a very great trust between the borrower and lender. Do your very best to maintain it!