There are many factors that play a part when trying to get lender approval to buy a home, and one of them is your credit score. Lenders typically vary on their minimum, but it is usually around 660 or above. If your score is no where near this, don’t worry! The 2017 credit score requirement for an FHA (Federal Housing Administration) is as low as 580 and may even go as low as 500 if you can throw down a larger down payment. There are also many ways to boost your credit score, all though the ugly truth is that there’s no quick fix and it can take some time. Here are some tips to boost your credit score so you can buy your dream home:
- Get a copy of your report and look for errors
In 2013, the Federal Trade Commission shared findings that roughly one in five consumers carries an error on their credit report. Learn how to dispute errors here [https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports]
2. Write a negotiation letter to your credit bureau
If one of your credit card companies is reporting a late payment, call them up and ask if they will campaign for the removal. If a payment was incorrectly reported (see above), or if you simply forgot a bill when you’re usually 100% on the ball, you may be able to get the late payment removed.
3. Lower your credit utilization to decrease your debt-to-credit ratio
Traditionally, you can lower your credit utilization rate by lowering your spending and increasing your credit line. Your credit is largely determined (30%) by the amount of debt (credit card and loans) compared with your credit limits. Alternatively, you can request an increase in your credit or open a new card as a way of increasing your credit-to-spending ratio, but this is a risky move if it also results in an increase of spending.
4. Don’t apply for multiple forms of credit in a short time
Each time you request a new form of credit, including car and home loans, etc., you’ll more than likely face a credit inquiry, and with too many inquiries within a short time the credit bureaus may decrease your score