Get Your Credit Score Up To Par: How To Get This Done

Part of getting a home loan is getting a good interest rate. Without a good interest rate, you may be shelling out too much money in interest payments alone, and could also have a problem being able to afford your monthly mortgage payment. With a lower interest rate, your payment will be less, which will make your dream home more affordable. To help get you that lower interest rate, you'll need a better credit score. Read on for tips to get your score up to par.

Check Your Credit Report

Get a copy of your credit report by getting in touch with one of the three credit bureaus. You are entitled to one free credit report each year. Take a look at the report and inspect it for anything that may not even be yours. If you spot a discrepancy on your credit report, don't pay for these things for someone else--contact the creditor and have this issue cleared up. Go through your report and check each and every creditor and amount owed. Clear up the older debts you have outstanding, and pay down credit card debts.

Stay Put

Your credit rating isn't just about the debts you have; it's about how long you've stayed at your current home or how long you've stayed at your current job. This shows stability, so if you're moving around a lot and have a lot of previous addresses in the last seven years, it can show up negatively on your credit report. The same goes for your job. Try staying put for a while if possible.

Have Some Debt

Just because you make a lot of money and have a great job doesn't mean anything if you don't have any type of credit to show for it. Paying for everything in cash may sound like a good idea, but it can also show that you have no credit at all--not something a lender wants to see. Establish credit by opening up a credit card, spending a little on it, and pay it off right away. Do this every month to increase your credit score and to show that you can afford your debts.

Don't Get Over Your Head

Some credit is all you need to show a lender that you can afford your debts, but don't overdo it. Have just a few credit cards or outstanding loans, not several debts. Too much is not a good thing, even if you can afford it. It may show that you are over-extended, which can give you a lower credit score.

If you are trying to get a home loan, improve your credit score to get a good interest rate and to afford your new home without having to pay too much in interest payments.