How Long Before I Can Improve My Credit Score to Buy a Home?
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Whether you are a first time home buyer or someone who has had some past credit troubles, there are some ways to bring your credit score up! Thanks to this realtor.com article, we will get a few tips and learn just how long it takes to get a higher score.
If you’re hoping to buy a home, you need to know what your credit score is! Lenders look at this score to determine if you can purchase a home and qualify for their mortgage services. Here’s a break-down of the scores:
Perfect Credit Score: 850
Excellent Credit Score: 760-849
Good Credit Score: 700-759
Fair Credit Score: 650-699
Low Credit Score: 649 and below
While the score required varies by area and type of loan, lenders will generally look for a score of 660 or higher before they will qualify you for a mortgage. So, how do you get your score up?
1. Correct errors on your credit report. The first step is to get a copy of your credit report. Next, you will need to review it and see if you can find any errors. If you find an error, you will need to refute it with the bureau by having proper documentation. This entire process usually takes 30-90 days. However, if there is a good bit of back and forth with the credit company, it could take longer.
2. Build a credit history. A low credit score doesn’t always mean you have bad credit. It could mean you don’t have ANY or what’s called “thin” credit. Opening a credit card and paying off the balance each month is a good way to build credit.
3. Deal with delinquent accounts. If you have bad credit, bringing delinquent accounts current and settling accounts that are in collections can also boost your score fairly quickly. Keep in mind, though, that your late payment history will remain on your credit report for seven years.
4. Lower your credit utilization ratio. Your credit utilization ratio refers to how much you owe compared with the amount of available credit you have. For example, if you have a $10,000 credit limit across all your credit cards and you have balances totaling $9,000, you’ve utilized 90% of your credit. This drags down your score. If you can’t pay some of these down, ask the credit card company to give a higher credit limit.
So, how long does it take to pull your credit score up? Here’s some good news for people with bad credit: Generally, people with the lowest scores will see the biggest gains the fastest. It could take a few months if you are dedicated and really careful. On the other hand, if your credit score is 740 and you are trying to get a 770, if could take double the time to get it there.