More people than ever plan to buy a home in the next six months. That means more people going to the bank for a mortgage loan, and more people who will need a good credit score in order to finance the biggest purchase of their life.
Luckily for borrowers, credit scores are on the rise. The average borrower is repaying debt and making use of ultra-low interest rates to finance major purchases like a car or home at a rate well under historical norms. If you're in the market for a home, though, you also need to pay attention to your credit score. Here's how you can juice your credit score fast:
1) Pay off large debts – Pay down any revolving debts like credit card debt to 30% or less of your total credit limit outstanding. By paying down your debts to a lower utilization rate, your credit score should rise tremendously as the credit bureau's algorithms negatively affect people who carry balances greater than 30% of their credit lines.
2) Negotiate with old creditors – Negotiate a pay-for-delete with old creditors who have left negative information on your credit history. A good pay-for-delete will allow you to pay off your balance and remove a negative mark on your credit score.
3) Have at least one revolving account – If you don't have one already, sign up for a credit card so that you can show some credit history with a revolving account. Banks like to see that you have some experience managing a credit account, even if it is just a credit card.
If you take these three steps, you can easily increase your score by 50 points or more. Doing so will allow you to get the best mortgages rates, the lowest monthly payments, and save you thousands of dollars over the life of your mortgage.