How to Improve Your Credit

Paying your bills on time is just one step in maintaining a strong credit score. Since credit scores play a major role in determining both your loan eligibility and terms, it's essential to take proactive steps to keep your score high. Here’s how:

Check for Errors in Your Credit Report

Start by reviewing your credit report for any inaccuracies. Thanks to an act of Congress, you can download a free credit report once a year at annualcreditreport.com. If you spot any errors, correct them immediately. The Consumer Financial Protection Bureau provides guidance on how to dispute inaccuracies effectively.

Pay Off Credit Cards

Whenever possible, pay off your entire credit card balance each month. Carrying a balance or frequently transferring debt from one card to another can negatively impact your score.

Avoid Maxing Out Your Credit Cards

Keeping your credit utilization low is crucial. If you can’t pay off your full balance, aim to reduce it as much as possible. Additionally, reassess your budget to identify areas where you can cut expenses and redirect funds toward debt repayment.

Wait at Least 12 Months After Credit Issues Before Applying for a Mortgage

If you’ve faced credit difficulties, patience can work in your favor. Waiting at least a year before applying for a mortgage can help lessen the impact of past issues on your creditworthiness.

Hold Off on Large Credit Purchases for Your New Home

Although it may be tempting to finance appliances and furniture before moving in, it's best to wait until after your mortgage is approved. Adding new debt during the loan approval process can increase your debt-to-income ratio and potentially affect your loan terms.

Refrain from Opening New Credit Card Accounts

When preparing to apply for a mortgage, avoid opening new credit cards. While it might seem beneficial to have more available credit, too many open accounts can actually lower your score.

Shop for Mortgage Rates Within a Short Timeframe

Applying for multiple loans can negatively impact your credit score. However, if you shop for mortgage rates within a short period, multiple inquiries from the same type of lender are typically treated as a single inquiry. This helps minimize the impact on your score while allowing you to compare rates effectively.

Avoid Finance Companies

Even if you make payments on time, loans from finance companies often come with high interest rates and can signal poor credit management to lenders. Instead, explore other lending options that may be more favorable for your financial profile.

By following these strategies, you can improve and maintain a strong credit score, increasing your chances of securing the best possible loan terms when you're ready to buy a home.

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The information being provided by Coeur d'Alene Regional Realtors is for the consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumer may be interested in purchasing. Any information relating to real estate for sale referenced on this web site comes from the Internet Data Exchange (IDX) program of the Coeur d'Alene Regional Realtors. Beutler & Associates is not a Multiple Listing Service (MLS), nor does it offer MLS access. This website is a service of Beutler & Associates, a broker participant of Coeur d'Alene Regional Realtors. This web site may reference real estate listing(s) held by a brokerage firm other than the broker and/or agent who owns this web site.
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The information being provided by Selkirk Association of Realtors is for the consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumer may be interested in purchasing. Any information relating to real estate for sale referenced on this web site comes from the Internet Data Exchange (IDX) program of the Selkirk Association of Realtors. Beutler & Associates is not a Multiple Listing Service (MLS), nor does it offer MLS access. This website is a service of Beutler & Associates, a broker participant of Selkirk Association of Realtors. This web site may reference real estate listing(s) held by a brokerage firm other than the broker and/or agent who owns this web site.

The accuracy of all information, regardless of source, including but not limited to open house information, square footages and lot sizes, is deemed reliable but not guaranteed and should be personally verified through personal inspection by and/or with the appropriate professionals. The data contained herein is copyrighted by Selkirk Association of Realtors and is protected by all applicable copyright laws. Any unauthorized dissemination of this information is in violation of copyright laws and is strictly prohibited.