Owning a home is a dream of everyone, which requires a considerable amount. Almost everyone who wants to buy a home needs to go through a loan process. A good credit score significantly improves your chances of getting your home loan approved.
Banks and financial institutions rely solely on credit scores to determine your eligibility for a home loan. They prefer giving loans to homebuyers with good credit score.
So, what is a good credit score? A credit score of 700 and above is considered good and a credit score of 800 or above is excellent. So, if your credit score is low, you should take all the necessary steps to increase your credit score for a home loan.
At Ashwin Sheth Group, we want every homebuyer to turn their dream of owning a home into a reality.
Here are some helpful tips that will help homebuyers to improve their credit score:
Pay your bills on time
Paying your bills every month on time helps you avoid late fees and interest charges which can dent your credit score.
Pay your bills in full each month
Get into the habit of paying your bills in full and avoid paying only the minimum amount due on your credit card. When you pay the minimum amount, the rest of the balance gets carried forward and the interest amount will keep accumulating till you settle the credit card outstanding dues.
Use your credit card regularly
Using your credit card responsibly and regularly is extremely essential. This shows moneylenders that you are a responsible borrower and are trustworthy with credit, which increases your chances of a home loan.
Keep your monthly card credit spending to under 30% of your limit
It is always better not to use your credit card to its extreme limit. A good rule of thumb is not to go above 30% of your credit limit and never carry a balance from one month to the next.
Check for errors in your credit report
You may have a good credit history, but there is every possibility for unknown errors that might be affecting your credit score. Therefore, it becomes crucial to check your credit report for errors. If you find any mistakes, try to resolve and eliminate them from your report.
Be honest about your finances
Be responsible with your spending habits. If you cannot afford a certain purchase, then avoid making it. Understand your financial situation before you spend your hard-earned money.
Pay in cash
Use your credit card regularly and responsibly to build a good credit rating but try paying in cash for many of your purchases. This will help you control your credit bill and your spending.
A good credit score is among the most important indicators of your financial health and tells lenders about your attitude towards credit. All these tips mentioned are helpful in improving your credit score over time.