In today’s market, your credit score is more important than ever. A difference of just a few points can mean a lower interest rate over the life of a loan – saving you thousands – or the difference between the approval and denial of your loan application.

That is why it is important to do everything you can to boost your credit score in the months leading up to applying for a home loan.

Here are five things you can do to potentially boost your credit score.

Check the Accuracy of Your Credit Reports

By law you are allowed to request one free credit report each year, so go ahead and request your credit report several months before you intend to apply for a loan. According to an eight-year study released by the FTC, 25 percent of consumers identified errors when they reviewed their credit reports. That’s a staggering number when you consider that even a small error can have a significant impact on your credit score.

Fortunately, you are allowed to dispute inaccuracies in your credit report and credit monitoring agencies are required to address any disputes in a timely manner.

So, before doing anything, request your credit report from all three agencies and check that it is accurate.

Reduce Your Credit Card Balance

Lenders typically do not look favorably on large credit card balances. If you use credit cards regularly, reduce your balance to 10 to 30 percent of your limit a few months prior to applying for a loan.

Ask for Late Payment Forgiveness

At one time or another, most of us have been late paying a bill – especially during the recent economic downturn. What most people don’t know is that they can request a “goodwill deletion” from a company and remove the black mark from the credit report entirely. Many companies are willing to do this for their customers if the late payment was a one-time occurrence. It never hurts to ask.

Keep Your Accounts Open

Reducing credit card debt is good; closing credit card accounts is bad. Length of credit history is factored into your overall credit score and can account for as much as 15 percent of the total number. If you close old, established accounts your credit score could suffer even though you have less debt.

Pay All Bills on Time

Recent activity is often more important than what you did several years ago. If you have a few bad spots in your credit history, do your best to pay your bills on time and in full for several months before applying for a loan. This will demonstrate to lenders that you are not a credit risk as well as boosting your credit score a few points.

Repairing damaged credit takes time. It’s not something that can be done in a few weeks. So, get started early – at least three to six months before you plan to buy a home – to give your efforts time to bear fruit. Contact me today for a consultation. I will be happy to answer any questions you may have and/or help you find your dream home.

Chris Wylie
The Chris Wylie Team
281-583-9393
www.ChrisHoustonRealEstate.com
www.CountOnChris.com

Throughout the Houston area including Spring, The Woodlands, Tomball, Cypress and Katy, Chris Wylie is known as a professional others can count on to guide them successfully through the real estate process. Her calm, friendly manner puts others at ease and makes the home buying and selling process a fun and memorable experience.

Photo courtesy of Simon Cunningham at Flickr.com.