Raising your credit score can be tricky. There are so many factors that determine the number, from the number of open credit accounts you have to the total of your debts, and one little mistake can lower your score by several points. When you’re ready to buy a house, it’s crucial to know how the credit system works and what you can do to get a great score. This begins, in part, by getting a handle on your finances and creating a plan for staying on track.
Legacy Shifters can help you get started with a financial wellness program that works for your family; for tips on how to boost your credit score, read on
Consider Your Down Payment
The first thing you’ll need to consider before looking for a new home is how much of a down payment you can afford. Your credit score will likely affect the amount you’ll have to lay out; most conventional loans require a score of around 620. Anything lower than that will determine your down payment amount, which ranges from 3.5 percent to about 20 percent of the home’s total cost. If your score isn’t quite where you’d like it to be, there are some programs that might be helpful, such as a VA loan or a Rural Development loan. These require no down payment and will allow you to focus on saving money for the move.
Change Your Spending Habits
If you don’t qualify for a VA or RD loan and need to boost your credit score, consider changing some of your spending habits. The things that will have the most impact on your score include credit card balances and outstanding loans, so you’ll need to start paying these down in a timely fashion. Keep in mind, however, that it’s important to have some credit on file, so you don’t want to close out your accounts. The more you can pay down large amounts and prove you’re reliable, the easier it will be for you to obtain a home loan.
If you find it difficult to rein in your spending in order to focus on paying down your debt, start small. Skip the coffee shop stops and make your own at home, or remove your credit card information from shopping apps to make it harder for you to impulse-buy. You might also share the process with your partner or a friend, which will give you some accountability.
Download a Credit Score App
It’s much easier to stay on top of your debts and spending habits when you have an app that holds all your credit info in one place, so download a reliable service that won’t affect your score every time you check it. This will allow you to not only monitor what you owe but also see old debts that are dragging down your score and could possibly be challenged. Every time your score changes, you’ll be notified, and that will help you stay on track as you plan for buying a new home.
Create a Financial Plan
A good financial plan is about more than just a budget; it also includes learning how money affects you emotionally and how that plays into your spending, as well as stopping financial leaks in your household that contribute to your debt. Legacy Shifters can help you with all that and more as you attempt to envision your financial future and lay out a plan for success.
Raising your credit score can take some time, so be sure to create a plan that will allow you some room to navigate the process. With the right guidance and some knowledge about the system, you can boost your score and find the perfect home in no time.
Have questions about Legacy Shifters? Contact us about our programs today. Send us an email and we’ll reach out to you.
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