Buying a home is one of the biggest financial decisions you’ll ever make—and unless you’re paying in full with cash, your credit score plays a huge role in whether or not you get approved for a mortgage. Not only does your score determine if you qualify, but it also affects your interest rate. The higher your score, the better your mortgage deal.
So if you’re thinking about applying for a home loan, especially if you’re eyeing Denver mortgages, boosting your credit score should be at the top of your to-do list. Let’s break it down in a simple, no-fluff guide that actually helps.
Ways to Improve Your Credit
Before you do anything else, make sure you understand your credit situation and what it means. Credit scores range from 300 to 850, with “good” scores usually falling between 700 and 740. Typically, this score will qualify you for the lowest insurance and mortgage rates, larger credit limits, and faster approval for items like home and apartment rentals. Most lenders offering Denver mortgages prefer scores of at least 680. But the higher, the better.
Check Your Credit Reports
Start by pulling your credit reports from all three bureaus (Experian, Equifax, and TransUnion). What to look fo
- Late payments
- Incorrect balances
- Accounts that don’t belong to you
- Negative items that should’ve fallen off
Dispute Errors
Mistakes happen, but if they are at your expense and affect your credit, you should definitely take action. If you feel your credit is inaccurate, contact the credit bureaus and register a dispute. In this debate, you must explain the error and provide documents to prove it. Although you will most likely be able to lodge disputes online, you may want to transmit documents via verified mail. Either way, keep a copy for yourself.
Take Control
Once you understand your credit score and any problems that may have happened, you can take steps to improve your financial situation.
First, ensure that you are paying all of your payments and debts on time. Establish automated payments if possible, or at the absolute least, set reminders for yourself. That way, when it comes time to pay bills, you won’t be late, incur fees, or have a bad influence on your credit.
Next, work on paying down any existing debt you may have, particularly credit cards with high interest rates. However, make sure you are aware of the maximums and avoid overspending, which will reduce your score.
Finally, if your current credit score needs to be improved, avoid applying for new credit. There are several explanations for this. For starters, it may tempt you to spend more, potentially resulting in greater debt and interest if the bill cannot be paid off immediately. But also because opening a new line of credit results in a credit inquiry, and having too many within two years might reduce your score.
Conclusion
Getting your credit score in shape before applying for a mortgage is one of the smartest financial moves you can make. You don’t need a perfect score, but you do need to show you’re responsible with money.