Havasu home buyers do not need a perfect FICO score to purchase a property. But a higher score increases your chances of loan approval. And the higher your score, the better your interest rate. With a median sale price of $365,000 last month, you need to get your credit in tip-top shape before you apply for a loan. To stay on top of a hot seller’s market, you need to obtain pre-approval for a home loan before you even start looking for a new house. So, if you plan on buying a Havasu home anytime soon, use these credit score tips to strengthen your financial profile before you apply for a mortgage loan.
How to Boost Your Credit Score
Check Your Credit Reports
Lenders pull your scores from all three credit reporting agencies (Experian, Equifax, and TransUnion) as part of the home loan process. They focus on the middle of these three scores to determine your interest rate as well as whether you qualify for the loan in the first place. Since creditors may only report to one or two of the agencies, your credit scores can vary by quite a bit. For example, Experian gives you a 620. Equifax shows your score at 610. TransUnion reports a 645. Lenders use 620 as your score on their paperwork. This might qualify you for some programs but not for others. If you can nudge your credit score on any of these reports, you end up looking much better to a lender.
Visit AnnualCreditReport.com to order a free report from each of the agencies. These do not include an actual credit score. That costs you a small fee. Some credit card companies and banks provide a FICO score for you as part of their services. Check your accounts to see. While your credit report may not include an actual score, it will tell you which of your creditors are reporting to each agency and what they are reporting. Review each report carefully to check for mistakes. (You’d be surprised how often mistakes are made.) If you find one, visit the appropriate agency to find out how to dispute any information on the report.
Ask for a Limit Increase
Several factors determine your credit score. One of them is your credit usage (how much you use vs. available credit). One way to increase your score with just a phone call is to request a limit increase. For example, currently, you owe $2000 over three credit cards. The total credit limit of all three is $6000. That’s a 33.3% usage of available credit. If you could increase your limit on each card by just $500 (to $7500 overall), you decrease your usage to 26.7%. That makes you look much stronger financially and all it cost you was a phone call.
Talk to Your Creditors Directly
Perhaps a quicker way to fix an error on your credit report is to contact the creditor directly. Made a late payment recently on a credit card or car loan? If you’ve been with the company for a while and this was your first late payment, they might be willing to erase it from your report. But if you tend to habitually make your payments late, they are less likely to work with you. It never hurts to try, though.
Make All Payments On-Time
If you fall into the “habitually late” category, you need to make a change now. The timeliness of your credit payments is another element that determines your credit score. Some companies and bank accounts allow you to set up automatic payments so you never end up making a late payment ever again. Think about utilizing this service when possible.
A Matter of Time
Finally, it’s simply a matter of time. Some negative items on your credit are easier to fix than others. Late or missed payments stay on your credit for seven years. The more distance you put between your last missed or late payment and your home loan application, the less important it is to your overall score.
So, if you decided that you want 2021 to include a new Havasu home, start whipping your credit into shape right now. When you’re ready to go shopping for that new house, contact me at (928) 208-5154 or email me.
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