How to Improve Your Credit Score [INFOGRAPHIC]

When you begin to think about buying your next home in the St. Louis area, you want to be sure that you have a solid credit score that will give you the best chances to qualify for a mortgage. Your credit score is a rating of your financial risk to a lender and is used to determine things like your interest rate and whether or not a lender will give you a loan at all. Many lenders will require a minimum credit score to qualify for a home loan. If you find yourself in a position where you cannot meet this minimum credit score, or you wish to improve your score to qualify for a better interest rate, don’t fret! We have put together some simple tips and tricks to help you understand how to improve your credit score in order to qualify for a home loan in the St. Louis area.

How to Improve Your Credit Score

Check Your Credit Report For Any Errors

You should check your credit report regularly to ensure there are no errors. Keeping a close eye on your report means you can dispute any mistakes quickly before they have a major effect on your credit. There are many places to check your credit report, including which allows you to pull a full credit report for free each year. Additionally, you can consider credit monitoring services, but these will often come with a fee. 

Pay Down Your Credit Card Balances

The lower your credit card balances, the higher your score will typically be. If you carry high credit card balances, paying them down as much as possible is a great way to increase your score, as lenders will see you as less risky when you carry less debt. A great practice is to pay off your balances each month. 

Don’t Max Out Your Credit Cards

You should never charge your credit cards to their limit. Keeping a credit card balance below 30% of its limit is the best practice to keep your credit score high and paying balances below the 30% threshold will improve your credit score.

After Credit Trouble, Wait 1 Year to Apply For a Mortgage

If you have run into credit trouble, such as missed payments, collections, etc, you should wait at least a year before applying for a mortgage. The penalties for these situations are less severe after a year has passed and you are more likely to qualify/get better rates as long as you have not run into additional problems. 

Don’t Charge More or Open New Credit Accounts After Applying For a Mortgage

There are several things you shouldn’t do after applying for a mortgage, and increasing your debt is absolutely one of them. It is easy to get excited about that house that you just secured a contract on, but do not run out and open new credit cards and run them up to furnish the home. This can affect your credit and potentially change your mortgage terms or even make it so that you no longer qualify at all. 

Shop For Mortgage Rates at One Time

When you are shopping lenders and mortgage rates, do it all at one time. Multiple inquiries can hurt your credit, but when there are multiple inquiries for the same type of credit (such as a mortgage) over a very short period of time, it will more than likely be counted as one inquiry and have less of an impact on your credit score.

In Conclusion

Building your credit and having a solid credit score is an important part of the home buying process if you plan to finance your home (which most people do). If you are a first-time home buyer looking to build credit for your first home purchase, or simply someone looking to improve your credit score before applying for a mortgage, following these tips can be super helpful. 

For a more personalized plan to improve your credit score, establishing a relationship with a local, trusted lender is a great first step! They can look at your specific credit situation and help you understand your lending options now, and what, if any, steps you might want to take to improve your credit score for more ideal loan terms. Obtaining a mortgage pre-approval is a crucial early step in the home buying process. We recommend that you work with a local lender that has a proven track record, great communication, and consistently closes on time. We have worked with hundreds of home buyers and have experience with a multitude of local lenders that we know and trust.

If you are considering buying a home in the Greater St. Louis area, our team of experts is willing and ready to guide you through every step of the process. If you have questions about how you can obtain a mortgage loan or any real estate needs, don’t try to navigate it alone. Fill out the form below and a team member will be in touch to discuss how we can serve you. 

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#1 By Credit Report Error Attorney at 3/7/2023 -2:55 PM

There are many ways to go about enhancing your credit score and becoming more financially literate. This article does a very good job of demonstrating different ways someone can and should improve their credit score. Thank you for sharing!

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