Looking to purchase a new house? The bad news is that getting mortgage approval can be daunting, especially if your credit rating is not up to the mark. However, it’s never too late to work on your credit score. Here’s a practical guide to repairing your credit before applying for a mortgage.
Review your credit report
The first step you should take is reviewing your credit report. You can order a copy from all three credit reporting agencies.
Misinformation is detrimental to your credit score, so make sure to thoroughly review your credit report to identify any discrepancies.
Once you identify any errors, dispute them with the credit bureau to correct the information in your report. If all of this seems too complex for you, not to worry! We can help you out.
How to Repair Your Credit Before a Mortgage Approval
Make timely payments
35 percent of your credit score depends on your payments history; therefore, it’s extremely important that you stay current on all your payments.
We’re not just talking about credit payments; you should also make sure that all your bills are paid on time.
Timely payments will also help you to bury delinquent payments and show to lenders that you can make your payments on time.
Improve your Credit Utilization Ratio
30 percent of your credit score depends on your credit utilization ratio; hence, you should work on improving your credit utilization ratio by paying off outstanding balances.
For instance, if your credit card has a credit limit of $2,000 and you’ve accumulated $1,200 in outstanding balance, it means that your credit utilization ratio is 60%, which is extremely high.
Try to bring it below the 15% threshold to improve your credit rating.
Don’t apply for new accounts
When you apply for a new account, the creditor pulls your credit report and makes inquiries, which can negatively affect your credit score.
Therefore, make sure you don’t open any new accounts that may trigger credit inquiries or add additional debt, which can hurt your credit score.
Use different types of credit accounts
You should consider having a mix of credit and loan accounts instead of solely relying on your credit cards, as this helps maximize your credit score.
For instance, if your debt portfolio has a combination of auto loans, credit cards, and personal loans, it will reflect positively on your credit report.
The length of the credit history also makes an impact on your credit score, so if you have a credit card that you don’t use, keep it activated to enjoy more points in your credit reports.
Become an Authorized User of Someone Else’s Account
If a trusted family member or friend has a credit account in good standing, ask them if they would allow you to become an authorized user of that account.
Once you get authorized, the account will be reported on your credit report, which will help you increase your credit score.
If you’re looking for a credit repair consultant in Miami, contact Master Credit Consultants. We’re an established consulting firm that offers credit restoration services to our clients Charlotte, NC and Miami, FL. To book a free consultation, call us at 1-844-620-8796 or visit our website.