Getting a home loan with a low credit score can be difficult. However, it is not impossible. Also, you can do many things to improve your credit score and make yourself a more attractive candidate for a home loan. This blog post will discuss some tips and tricks that will help you boost your credit score and increase your chances of getting the loan you need!
Dispute Inaccurate Information on Your Credit Report
The first step you should take is to dispute any inaccurate information on your credit report. If items on your account are not accurate, you can contact the credit bureau and ask them to remove them. Remember, you are allowed one free credit report per year from each of the three major bureaus, so be sure to check your report regularly and dispute any inaccurate information.
Pay Off Delinquent Debts
Another way to improve your credit score is to pay off delinquent debts. If you have any accounts that are past due, try to get caught up on the payments as soon as possible. This will show lenders that you are responsible for your money and that you can make timely payments. Delinquent accounts include credit card bills, car loans, student loans, and mortgages. If you have trouble making ends meet, consider talking to a credit counseling service. They can help you develop a plan to get your debts paid off and improve your credit score.
Keep Your Credit Utilization Low
Another essential factor that lenders look at when determining your credit score is your credit utilization. This is simply the ratio of your total credit limit to the amount of debt you have outstanding. Lenders want to see that you are not using too much of your available credit, so try to keep your credit utilization below 30%.
Reduce Your Debt to Income Ratio
Another thing lenders look at when determining your creditworthiness is your debt to income ratio. This is the monthly debt you have compared to your monthly income. Lenders want to see that you can afford a new loan, and they will use your debt to income ratio as one factor in making their decision.
Try to keep your debt to income ratio below 36%. You can increase income, decrease debt, or do both to reduce this ratio.
