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7 Tips to Improve Your Credit for First Time Buyers

First Time Buyers naturally don’t have much credit history to back them for a mortgage. Their Credit score, along with their overall income and debt, are big factors in determining whether they’ll qualify for a loan and what their loan terms will be. It’s very important to note that raising your credit score takes time and there is no quick fix. Most of the time the quick-fix efforts tend to backfire. You need to show responsibly in managing your credit over time.

First Time Buyers Credit Score

First Time Buyers Credit Score

First Time Buyers need to understand that they have plenty of company. There are millions of people in the United States with blemishes on their credit, which makes obtaining loans reasonably difficult. I am here to tell you that there are ways to improve your score and reverse some of the damage that has been done. You need to do some basic housekeeping to get started. Get a free copy of your current credit report, review it completely for any mistakes and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management. Once that’s accomplished, you can improve your credit score by using the following 7 Tips:

1. Pay down credit card bills

If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score.

2. Keep debt to a minimum

Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down. Don’t close unused accounts, because a zero balance might help your score. Don’t open new accounts to have a zero balance because that doesn’t work the same way, it will lower your score

3. Don’t rush to apply for mortgages

You need to wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.

4. Wait on buying big-ticket items

Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.

5. Don’t expand your credit range

Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score. Maxing our your credit cards could lower your average score by as much as 70 points.

6. Space out your Applications

Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

7. Stay away from Financing Companies

Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor debt management.

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