Importance of Credit Score for First Time Home Buyers

Improve Your Credit Score

Having a good credit score is an important part of getting a loan when buying a home. In fact, the difference between a good and bad credit score can amount to paying several hundred dollars more per month on your mortgage. Then for starters, how can you go about checking on what your current score is? And if it’s not all that great, what are some fast ways you can use to begin improving your credit score? This insightful post can help answer those questions and more:

Free Credit Reports
You can obtain free credit reports from the three credit bureaus at www.annualcreditreport.com on an annual basis.  This is the only true free service available to consumers and authorized by the federal law.   The other services may at first free, but they aim to sell you additional credit monitoring and or related services which are not.

Some people like to stagger their pulling of the credit reports from www.annualcreditreport.com as a free way of tracking their report every four months.

The only downside of this free service is, it does not include the score.  Your score is what you and your lender really need to know to sort out your mortgage loan options. For a small fee from www.annualcreditreport.com, you can easily get your credit score or you will likely get it when you sign up for homebuyer counseling services.

Improving Your Credit Score
The good news about your credit score is that there is a lot you can do to improve your score right away! Here are some of the keys to improving your credit score or keeping your credit score as high as possible:

  • Always pay your minimum payments on time
  • Keep your credit balances low (30% or less of your available credit limit) 
  • Do not close your credit card accounts (you’ll lose the balance and the history)
  • Correct inaccurate information on your credit report
  • Don’t co-sign a loan unless you can afford the payment on your own
  • Guard against identity theft by keeping your Social Security Number private
  • Spread out your credit card balances among all your cards
  • Carefully document payment of any past due accounts

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