If you’re dreaming of buying a home, you should know the score — your credit score, that is.
This three-digit number is the code that can unlock the door to a better interest rate on your mortgage, potentially saving you thousands of dollars. With Interest rates on the rise, knowing your score, and taking the opportunity to improve it, is going to be an important factor if you’re planning to buy a home.
1. Get a copy of your current credit report from Transunion or Equifax. It’s important to know exactly where you’re starting at, so you can decide if you need to take steps to improve your score.
2. Take the time to assess your current payment obligations, then create a monthly budget and stick to it. Understanding that late or missed payments can negatively affect your score, while paying early and on time can positively affect it.
3. Refrain from taking on new debt (applying for new cards) or exceeding current credit card limits. “It’s best to keep your credit “utilization rate” below 30%. That means, you should keep your balance at no more than $3,000 on a credit card with a limit of $10,000. In order to meet that 30% target, pay cash for purchases instead of putting them on your credit card to minimize the impact on your credit utilization rate.” And, if possible, pay off, or pay down credit debt to meet the 30% rule, focusing on paying the debt with the highest interest rates first.
While your score doesn’t have to be perfect, it is affected by your spending choices. So, why not choose to make a few changes to some financial habits over the next few months that can improve your score and make you a stronger candidate for a better interest rate.
If you see a new home as part of your future goals, let’s chat about what you can do to prepare to make that goal a reality!
Sincerely,
The Rosts
INFORMATION HEREIN DEEMED RELIABLE BUT NOT GUARANTEED