There are plenty of reasons why you should boost your credit score. But if you’re preparing to purchase a house, know that an exceptional credit score can increase your chances of getting a lower interest rate on your home loan.
If you want to raise your credit score, there are several quick, simple things that you can do. While it might take some months to see an improvement in your credit score, you can start boosting your credit in just a few hours.
What is a Credit Score?
A credit score is a number from 300 to 850 that predicts your likelihood of repaying your debt. The higher the score, the better a borrower looks to potential lenders.
Your credit score is calculated based on various factors: payment history, debt burden, length of history, etc. Lenders use credit scores to evaluate the likelihood that an individual will repay loans on time.
Why Does a Good Credit Score Matter?
A good or exceptional credit score can save most borrowers hundreds of thousands of dollars throughout their lifetime. A person with an outstanding credit score will be granted access to better mortgage rates and anything that involves financing.
Someone with a better credit rating is deemed a low-risk borrower by lenders, with more banks competing for their business and offering better fees, perks, and rates. On the other hand, individuals with bad credit ratings are deemed higher-risk borrowers, with hardly any lenders competing for them.
How to Boost Your Credit Score Quickly
Search for mistakes: It’s common to find errors on your credit report with one or more credit bureaus. If you spot an error, dispute it directly with the bureau and follow the required steps to resolve it. You can also hire a credit report service to fix your credit report.
Increase your credit limit: Contact your current credit card companies and ask if they’ll increase your limit — just ensure that your credit score won’t drop because of the increase in your credit limit. You’ll effectively decrease your credit usage percentage with an increased credit limit.
Pay down credit card debt: Pay off as much credit card debt as possible. Paying off a credit card in full can increase your credit score fast.
Include alternative credit sources: You may be able to give it a quick boost by connecting your things like a mobile service provider, electricity provider, or even cable TV. On-time payments to these services can increase your score.
Remove yourself from shared credit: Has a family member or friend added you as an authorized to their credit card? If they hold a large amount of debt on that card, it can lower your score. Ask them to remove you as an authorized user.
What else can you do as a prospective homebuyer?
Boosting your credit score is an excellent goal, especially if you want to make a big purchase, such as buying your first house. It can take several weeks, or even months, to see an improvement in your score when you start taking steps to improve it. However, you'll yield results sooner if you start improving it now.
If you want to know if you can qualify for a loan, talk with one of our loan officers for assistance.