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A real estate closing can be one of the most exciting achievements of your life, but it does take a lot of work and preparation. Along with saving up the down payment, you’ll also have to secure a mortgage. Luckily, building up your credit score before house hunting can make the process easier and save a lot of money in interest. Here are a few tips for boosting your credit score before you buy a home.

How to Boost Your Credit Score Before Buying a Home

1. Pay Down Debts

The debt utilization ratio is the proportion of your credit accounts available for use. Credit cards that are close to the limits or loans with large outstanding balances will drag down the rating. Generally, mortgage lenders prefer borrowers who are using less than 30% of their available credit. If you have enough for a down payment, start directing money toward paying down any debts. Once an account is paid off, however, you should keep it open; available credit can also help boost the debt ratio.

2. Check Your Credit Score

real estate closing

Many credit reports contain errors that can significantly affect your rating. Before applying for a mortgage, request a free copy of your report from each of the three bureaus and check them carefully for errors. Disputing accounts that aren’t yours and paid-off debts marked as delinquent could boost your credit score by several points.

3. Don’t Make Major Purchases

Many new homeowners decide to purchase appliances and furnishings for their new house. However, the mortgage lender will likely check your credit report again before the real estate closing. Any dramatic changes in your financial situation could cause them to rescind the loan offer, potentially derailing the sale. Once you’ve submitted the loan paperwork, avoid any major transaction that isn’t directly related to buying the house. After you’ve taken ownership, you can take stock of your finances and decide whether you’re in a position to take on new debt.

 

For over 20 years, Innovative Closing Solutions has provided prompt, personalized service to homebuyers throughout Greensboro and Winston-Salem. Whether you’re a first-time homebuyer or seasoned investor, their team will make the real estate closing process as easy and stress-free as possible. Visit their website for more on their two-week real estate closing process, follow their Facebook page for tips and advice, or call (336) 793-1953 to make your first appointment today.

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