Here’s How to Get Your Credit Ready to Buy a Home

March 8th, 2021 by
Getting your credit ready to buy a home

Photo by Binyamin Mellish / Pexels

One of the biggest purchases you can make in your life is buying a home. But how do you get your credit ready to handle such a big purchase?

Getting your finances in shape at any time is a good idea but it is also one of the essential things to do if you are looking at taking out a mortgage. This will help you if you are wanting to get a better rate on your mortgage.

Related: How to Stay Organized With Your Finances

Financial guru Suze Orman has some suggestions on how to get better rates when searching for a mortgage. 

  • Pay off your credit card balances in full to keep your credit utilization lower. Ideally, you want your credit utilization to be below 20% of your overall borrowing amount.
  • Increase your credit score by requesting and checking your report and score. Look at what can be done to improve your score and reporting on anything that you don’t recognize in your credit report.
  • Have savings. Having some sort of savings can show lenders that you support yourself short-term if anything were to happen to your income.
  • Curb spending on things you don’t need and stop using your credit card to pay for items. This can affect your credit utilization, even if you pay off the debt in full each month.
  • Pay off any other debts that you have early so you can show lenders that you can afford the monthly payments on your mortgage.

Related: What to Know About Investing Long-Term

The above recommendations and correcting any misreporting on your credit file will help you in the long run with obtaining a new mortgage.

 


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