Ready to purchase a home in Seattle, Bellevue, or elsewhere in WA, but don’t have a perfect credit score? While there are options for buying a home without ideal credit, you can qualify for the most competitive mortgage options if you raise your score first.
If you have some time to do that, here are the steps you should take to try to boost your credit score quickly before applying for home loans.
Here are 8 steps to take to raise your credit score.
1. Check your credit reports.
Looking at your credit reports tells you what data goes into calculating your score. This is your starting point for making improvements. Note that each report may contain different information.
2. Correct mistakes on your reports.
While much of the data on your reports may be correct (perhaps all of it), you may find some inaccuracies in the data. If you do, you may be able to improve your score fast by writing the bureaus to correct the mistakes. The burden of proof is on the reporting agencies.
3. See if you can get other negative items removed from your reports.
Sometimes even if a negative entry in your credit report is truthful, you may be able to get it removed. If for example you have a record stating that you paid late on an account, you may be able to have that record erased by writing the company that reported it.
You will have the most luck with this if it was a one-time incident and you have paid on time since. Make it clear in your letter why it happened and why it will never happen again.
4. If you are behind on any accounts now, catch up with them if you can.
Getting current on your accounts and staying current can help you to repair your score before you apply for a mortgage.
5. Reduce your credit utilization.
You should try to keep your credit utilization at any given time as low as possible. If your balance is over 50% on average, try looking for ways to change your spending habits so that you can get it down under 50%. If possible, try using your credit card like cash. Pay off your balance each time immediately after you use it.
6. Pay off debts if possible.
If there are any debts you can pay off now without destabilizing your finances, do so. For those you cannot, look into options to consolidate at a lower interest rate so that you can save money each month and get better control over your finances.
7. Resist the urge to close credit card accounts.
If you have just paid off a credit card account, you might be tempted to shut it down. But it is better to leave it open. If you are worried, you’ll be tempted into using it, you can just cut up the physical card and delete the card details if you have them stored on e-commerce sites. This will stop you from using your credit card to finance purchases.
8. Try not to make any other big purchases.
If you are right about to apply for a mortgage, chances are good you are also looking into buying furniture, appliances, and maybe even a new automobile or two. If possible, hold off on these purchases until after you apply for a mortgage. Avoid any applications which might result in hard credit checks.
What If You Can’t Raise Your Credit Further?
Hopefully taking the steps above can help you to improve your credit in time to apply for a mortgage, but if you are out of time or simply cannot raise your score any higher, there are still some actions you can take to get a competitive loan.
- Choose a mortgage company that works with customers with less-than-ideal credit scores.
- Have written explanations ready for bad entries on your credit reports.
- See if you qualify for loans with looser credit score requirements like FHA or VA loans.
- Consider talking to a credit counselor about your situation and seeing if you can get some extra advice.
- Improve other financial metrics if possible.
- Get pre-approved before you go shopping for houses.
At Blue Square Mortgage, we work with homebuyers at a wide range of credit levels. Even if your score is not perfect, we can connect you with an affordable and flexible home loan in Washington state. Please call us at (206) 352-6453 to schedule a consultation.