It is really fun to start thinking about your financial goals and it is exciting to think of the future when you imagine a new car or a new home.
The last thing you want to worry about is obstacles getting in the way of you accomplishing your goals.
One of these could be your credit score.
Many people wait until their credit score is about 740 before they start applying for loans which is when rates are best for borrowing. But what if you are far away from that number?
Here are a few easy ways that you can build credit as a first-time home buyer:
No.1 – Destroy those debt balances
The biggest and fastest way to reach the perfect credit score is to decrease your overall debt.
When your available credit is as high as possible, that is when your credit score will soar.
Not using a credit card at all can also be a form of credit suicide: you need to use it in order to build your credit.
But don’t let your spending get out of hand. Meet deadlines set by the bank before they report you to credit bureaus.
No.2 – Get caught up on bills
Life gets tough and in our current economic climate, it is very easy to let bills slip behind. However, if it is not obvious, you should never let it happen.
Paying bills on time is a positive indicator on your credit score. For a really quick boost, pay those late bills as soon as possible.
Another good thing to know is that most creditors don’t report late payments until it is 30 days overdue. So you have more than enough time to pay those bills before they have a negative impact on your finances.
No.3 – New accounts
You might think opening a new account or credit card will hurt your score, but that is simply not the case: each new card or account you open increases your available credit.
This means that your credit looks amazing if you keep the balances low. Having various types of credit will also be beneficial so when you do open a new card or account, move away from the ones you already have.
Be cautious though – don’t bite off more than you can chew. If you open every available credit card to you, there might be a bunch of inquiries headed your way.
No.4 – Be an authorized user
If you have never established credit for yourself before, it can be difficult for you to start building credit.
Luckily your family members can help you.
If they have awesome credit, you can ask if they can list you as an authorized user. This is a great way to start building your own credit as well as increasing the other person’s credit score.
You have to keep in mind that it is your responsibility to find out more about their credit history because their bad credit will also be associated with yours.
No.5 – More doesn’t make a difference
The number of service providers that report your payment history doesn’t really make a difference – not yet, anyway.
Even though credit agencies are making some changes in terms of which bill payments they consider, most of the time these payments only appear when they are delinquent.
If you haven’t implemented these tips already, it would be a good idea to start before it is too late! A good credit record shows a long history of consistent payments and banks look at that when you apply for a home loan.
Don’t let a lack of credit ruin the perfect image you have of living in your dream home.
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