Clean up Your Credit Score to Buy a New Southern Maryland House

Kimberly Bean
Kimberly Bean
Published on January 21, 2016

Buying a house is part of the American Dream for most of us. It’s a practical and financially wise decision, too!

As much as we love the idea of buying a Southern Maryland house, the amount of money involved can make you wary of the process. Planning your budget is the first step, and you can get an estimate of the price of home you can afford by looking at your income and savings. Like most Southern Maryland home buyers, you’ll probably be looking for financial assistance to buy a home, and this is where your credit score comes in. Lenders use your credit score as one piece of information to help them decide whether to extend a loan to you and for how much.

Is your credit score ready?

Check your scores

Credit scores are one way to measure the “credit worthiness” of an individual – whether he or she will be able to pay back the loan on time. Your scores are based on your credit history, the number of credit lines and loans you hold, whether payments have been made on time, and the amount of outstanding balance you are carrying on other loans and credit cards.

So before you decide to buy a house, you need to know whether you have a good credit score. If you have been paying your outstanding bills and payments on time, you most likely will have a good score. Even so, it’s still a good idea to check.

Identify your weak spots

There are three main credit bureaus in the U.S. – Experian, Equifax and TransUnion. They have some differences in the parameters on which they base their scores, your scores from all three will typically be pretty close. For a small fee, you can get your credit report from one or all of these bureaus. Review your report closely, especially the section about adverse accounts. This section lists the accounts where you may have missed payments or defaulted. Make a note of the accounts on which you have missed a payment more than once.

You should also check your average outstanding balance against your credit limit. If the ratio is too high, make a note of that as well. And, check to make sure the entries add up. Even the credit bureaus can get their information wrong sometimes.

Correct some mistakes, undo others

For the accounts on which you have been missing payments, it is time to make sure you are paying your bills on time. As your payments get regular, your credit score will start improving over a period of a few months.

In cases where you have had one or two late payments, call the company that registered the late payments and ask for them to be removed from your credit report. Most companies are willing to do this if you’ve only missed one payment, two at most.

And, if you have too many open credit lines with small outstanding balances and can spare the money, pay off these debts and close those accounts.

Request a credit limit increase

On some credit lines where you have been regular with your payments, the ratio of outstanding balance to credit limit may be too high. A simple way to make this ratio look better is to request that your bank or financial institution increase your credit limit. A credit limit increase only be accepted if you have a history of good payment behavior. Make sure to not exhaust the increased limit because the purpose of this limit extension is to reduce your ratio. Increasing expenses will defeat the purpose.

Raise disputes, if any

If you’ve found any incorrect entries in your report, send a dispute letter to the credit bureau. Provide all the information and documents needed to prove your case. This can take time, but correcting records can help boost your score.

Improving your credit score can take time, and it is best to start this process well before you begin looking at homes. Even if you’re not planning to buy a house right away, it is good to begin working on raising your credit score. By the time you’re ready to buy, you scores should be ready, too.

Brandywine MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309

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