If you want to take out a mortgage and get an awesome home loan, you’re going to need good credit.
In the modern world, good credit is pretty much a necessity.
And if your current credit isn’t super awesome, then you may need to take steps to improve it so that you can increase the odds of getting the very best deal possible.
As a general rule, the minimum credit score that you’ll need to successfully get a home loan is 620.
Of course, the higher your credit is, the better off you’re going to be when the time comes to get your loan and begin the process of buying your first home.
So in this blog post, you’re going to learn the 5 best ways to strengthen your credit, starting today.
Let’s dive into it.
1. Increase Your Income
The more you earn, the better your credit score is going to tend to be.
The reasons for this are surprisingly simple.
With a higher income, you’ll naturally end up with a better debt-to-income ratio.
Plus, the better your verifiable income is, the ‘safer’ you’ll be for lenders who want to hand out mortgage loan money.
2. Start Paying Down Your Debt
Paying down your debt is a crucial part of increasing your credit score.
If you have a lot of debt on your credit record, your debt-to-income ratio will be a bit skewed.
Interestingly, this is sometimes a problem that keeps doctors and dentists from being able to get conventional home loans, despite the fact that their income is so high.
Since medical school leaves you with quite a bit of debt when you graduate, paying down your debt will make you look better to lenders, and will help you to improve your credit rating by a pretty substantial degree.
This is why doctors usually search for the best mortgage loans for physicians, to help them bypass the issue of having a skewed debt-to-income ratio, which could otherwise keep them from being able to get a home loan—despite being able to afford it.
3. Pay Your Bills On Time
Late credit card payments, car payments, and house payments reflect badly on your credit rating.
Late payments make you look like a ‘less safe’ lending option.
When mortgage companies see that you tend to run late on your payments, they treat you as a less trustworthy person to lend money to.
Thus, when you start making all of your payments on time, your credit rating will probably begin to increase.
4. Establish Quality Lines Of Credit
Having an unused line of credit can look really good on your credit score.
For example, if you tend to make your payments on time and control your debt-to-income ratio, then getting another credit card and extending your line of credit without necessarily even using that line of credit and/or using it just minimally can tend to increase your credit score—because it makes you look like a more responsible borrower to lenders.
So if everything else seems to be on track, then you may want to consider taking out a personal loan or signing up for a new credit card to help you expand your available credit and increase your credit score.
5. Understand That Building Credit Is A Long-Term Process
To some degree, performing some of these important and positive steps can help you to make small, fast increases to your credit score.
However, the most significant thing to understand about your credit score is that it sometimes just takes time to build it up.
Therefore, sticking to good spending habits, minimizing debt, and just in general maintaining a positive credit presence are really long-term affairs that will eventually lead to better credit scores.
To a certain point, you can’t rush this.
It may take you a few months, or even a couple of years, to really clean up your credit if you’ve faced some financial trouble in the past.
But putting positive effort into your credit history now and in the future can really help you to turn things around.
Just be patient, settle in for the long haul, and continue to make those payments.
Eventually, your credit score will increase
Conclusion
There you have it.
5 ways to strengthen your credit.
These tips will help to get you started on the path to increasing your credit score, thus empowering you to actually qualify for a mortgage by the time you’re ready to buy a home.
You can do this.
Now get out there and make it happen.
