Back in the day, you could get a home loan without demonstrating any verifiable income or saving for a down payment. You did not even need to have great credit. All you had to do was find a house and shake off the fear that your adjustable interest rate might double your mortgage payment in a couple of years. Times have changed, however, and there are now stricter lending standards in place. In order to buy a home, you will need to save some money, and you will need good credit. Here is some help on how to pimp your credit. Follow these tips to show yourself off to lenders as a great credit risk. You’ll be rocking a new crib in no time.
- Check your credit report. You get to do this for free once a year. If those hilarious commercials on television haven’t sent you to FreeCreditReport.com yet, go there now. Once you get your free report, check it for errors or inaccuracies. This is the first thing lenders will look at.
- Pay off all your debt. All of those credit card offers you accepted in college need to be trimmed back. Bring down the balances on your credit cards and loans. The less money you owe at the time you apply for a mortgage, the more likely you are to get an affordable home loan.
- Hold off on financing large purchases. Do not open new lines of credit right before you plan to buy a home.
- Pay your bills on time. Do what you have to do to make sure your payments are not even a day late. Pay online, set up automatic withdrawals from your account, pay bills as soon as you get them. Your payment history will affect your credit score, and if you pay late, mortgage lenders will worry about your ability to make timely mortgage payments.
- Educate yourself. Understanding credit and tackling debt is all the rage. Watch a little CNBC in between reality television shows, read a financial blog or two after you download cat videos on YouTube and pay attention to developments in the lending industry.
- Talk to a few lenders. You can compare mortgage rates and costs here. If you find a lender that you would like to work with, get the ball rolling. Even if you are not ready to apply for a mortgage yet, developing a relationship with a potential lender can be beneficial. He or she can share some tips on where your credit can be strengthened.