If you want to know how to increase your credit score to buy a house, we got your back. In this article, we will explain to you the 101 on how to improve your credit score to purchase a home. So, read on. Your dream home is at the reach of your hand.
What is a good credit score to buy a house?
Your credit score is a number from 300 to 850 based on your credit history, you always want to increase the credit score. The higher your credit score is, the greater the chances investors and entities will lend you money. Usually, a credit score below 580 is a terrible score, anything like that will scare any lender away. So, what is a good credit score, and what is an excellent one?
While scores between 580 and 670 are not completely bad, what you want is to achieve a score above 670. That score will put you in what most lenders consider a safe zone for investment. Credit scores ranging from 740 to 799 are great credit scores; with that kind of score, you will get loans without trouble. Finally, a score from 800 to 850 is an excellent one.
5 Tips to improve your credit score to purchase a home.
Now that you understand why your credit score is so important, it is time to learn how to increase your credit score quickly. This way, you will have better chances to find new homes in Miami. That is why today we have five different tips to improve credit score ready for you. So read on and find out the safest and best tips to boost credit score legally.
1. Stay up to date with payments
Staying up to date with payments will get you a long way ahead in your quest to improve your credit score to buy a new house. However, many people struggle to remember the deadlines for each payment resulting in negative points for the credit score. If you have that problem, a good idea is to program alarms and reminders on your phone. With their help, you will never miss out on another payment date.
2. Bring your credit card balances close to zero
The utilization rate is another important factor to consider for the credit score. In simple words, your credit utilization rate is how much is your total debt, divided by your credit limit. The utilization rate usually comes as a percentage that represents how much credit you are using and have available. Moreover, the greater your good credit history, the better your credit score will be.
Even if you are not using those cards, having a balance close to zero means the credit is available which grants you points for your credit score. Another important aspect is that closing your cards will not erase your credit history. However, if a card balance is near to zero and you close it, your total utilization rate will suddenly change to reflect that you have less credit available.
3. Don’t apply for new credits so often
Some tips to boost credit score talk about using credit constantly to increase your credit history. However, that is not completely accurate. While increasing your credit history is good in the long term, applying for new credits often will make you look unreliable. That is because using credit too often implies you are having problems with money and may not be able to pay back in time.
4. Don’t wait for the due date to pay (and do it more than once)
Two of the best tips to boost credit score, are paying two weeks before the due date and then again at the due date. This payment plan is the biweekly payment. In essence, paying two weeks before the due date and once more at the due date will lower the total interest. Moreover, biweekly payment lowers the average daily balance, which is good for your credit score.
5. Request quick credits as a last resort
Quick credits are a fast way to hurt your credit score. The reason for this is that quick credits are for solving emergencies. More than once, someone in need ends up asking for a quick credit to get out of trouble only to fail later at the payments. Additionally, needing money fast means you are failing at your finances. In other words, it means you have poor creditworthiness.
Increase your credit score to buy a new house in Miami!
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