Want to buy a house but your credit needs some TLC?

You aren’t alone. Life circumstances and events can unexpectedly come up you can’t predict. It is however, important to improve your credit ASAP if you are planning on buying a home. Your credit score is the single biggest factor that will determine when you can buy a home, with a close second being your downpayment. If your credit score is below a minimum 620, lenders will not give you a loan or pre-approval. Even if you have a decent credit score, you could be missing out on a better interest rate, which equates to tens of thousands of dollars over the life of your loan.

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OK, so what range do you need to get your credit score into for lenders to consider you a qualified borrower?

🫠 Below 620: Most lenders will not lend to you. (Some exceptions apply)‍

😊 620 - 760: Most lenders will lend to you.

😍 Above 760: Most lenders will give you a better interest rate.

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Thankfully, this is pretty straightforward and only requires a little bit of your time over a weekend.

1. Easiest ways to improve your credit ✅

• If you are currently renting, utilize Experian Credit Boost in a few clicks! https://www.experian.com/credit/score-boost/
• Avoid medical bill collections. 
  
  • If you have any bills currently in medical collections, pay them off ASAP before any other outstanding debts.
  • Pay your medical bills on time. 
  • Even a missing small co-pay ($60) can do serious damage to your credit.
• Do NOT close or terminate any of your credit cards.
  
  • Having more credit available to you is a big factor in calculating your credit score.
  • Reminder, do NOT use this credit available to you. It’s tempting but do NOT use more credit than you can pay off at the end of each month.
• Do NOT max out credit cards. 
  
  • This one seems obvious, but absolutely do not max out credit cards. 

2. Next easiest ways to improve your credit 💪

• Keep credit card usage below 30% of available credit.
  
  • This is a critical threshold that impacts your credit score.
  • If your credit usage is currently over 30%, work to pay it down until you meet this criteria.
• Increase your current credit card limits.
  
  • You can often request to increase your credit card limits.
  • Do NOT use this extra credit.
  • Increasing your total available credit, will help keep your usage below 30%.
• Open up new credit cards.
  
  • Do NOT use these cards though.
  • Increasing your total available credit, will help keep your usage below 30%.
• Put your bills on autopay.
  
  • This helps ensure you avoid collections and missed payments.

3. More time consuming, but will improve your credit ❤️

• If you incur a large medical bill, ask your medical care provider if they can pardon all or part of the bill. 
  
  • Medical providers are willing to work with you on large bills!
  • You will most likely be asked to provide your social security number and submit bank statements for them to make a determination.
  • Call your medical provider to learn how to submit a letter or hardship claim.
• If you incur any large medical bills you can’t pay in full, ask your medical care provider to put you on a monthly payment plan.
  
  • Medical providers will often accommodate you and ask how much you can realistically pay each month.

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Need a little help getting started?

Schedule a call with one of our house hacking coordinators. We're friendly... promise.

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