Credit is a powerful tool you need on your side when it comes to buying a home. The Lawhead Team would like to share some tips to increasing your credit score so you can qualify to buy a home.

Your credit score will be analyzed by a lender to determine if you qualify for a home mortgage, a car or any other type of loan. Before they lend you money, they want to know how much of a risk you are. The higher your credit score, the less of a risk they feel you will be.

Building your credit takes time and requires an ongoing effort from you. Follow these tips to building your credit:

• Always pay your bills on time. Late payments have a majorly negative impact on your credit score. If you have past due bills, get them current and keep them that way.
• If you know you will have a problem paying a bill on time, call your creditor to work out a payment arrangement so you do not go late on your payments.
• Keep your debts low. High debt to credit limit ratios drive your credit score down. Pay off your debt, don’t just move it around.
• Don’t close unused accounts. A zero balance may help your score.
• Don’t open new accounts you don’t need. This can lower your score.
• If you open new accounts within a short amount of time, this can be a red flag. Avoid opening up new accounts especially if your credit is less than three years.
• Avoid multiple credit inquiries within a short amount of time. If multiple inquiries are necessary – such as if you are shopping for a new car or home loan – have them pull the inquiries as close together as possible.
• Monitor your credit. Checking your own credit down not affect your score plus you will know if anything suspicious or bogus appears on your credit history.
• If you have had credit problems in the past, you may want to open a new account and keep it paid on time and not maxed out.
• If you manage them correctly, a mixture of credit cards and installment loans can help raise your credit score. However, multiple installment loans can lower your score since payments remain the same until balances are paid in full.

Do you have questions about applying for a home loan? Please call The Lawhead Team, “Because two Lawheads are better than one!”