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How to Improve Your Credit Score as a First-Time Home Buyer

If you’re exploring the option of entering into the world of homeownership for the first time, there’s a lot to consider. Our brand new homes in Lakeville MN are a great choice for first-time buyers, because you can ease into home ownership without the risks and frustrations that come with older homes. However, no matter what type of home you want to buy, it’s important to have good credit to make the process easier and give you a better chance of getting the home you want. Here are some steps to help you improve your credit before trying to qualify for a mortgage.

First, you need to know what your credit score is, and this can be done by contacting the three major bureaus that produce credit scores: Experian, Equifax, and TransUnion. You will need to pay a small fee to receive your credit score from them, though you may be able to obtain a free credit score and report from your credit card company. You can get a free report, without the score, from annualcreditreport.com. It’s important to have the report, as well as the actual number, because roughly 30% of people find at least one error in their report, which can be disputed and potentially improve your score.

If you typically pay your bills on time, but have been a little late on one or two payments due to the vagaries of life, you can contact the company and ask them to remove the late payment from your report. As long as you haven’t had multiple late payments, most companies will oblige. If you regularly make late payments, now is the time to change that, starting with automatic payments and regular reminders.

You should certainly try to pay down your credit card debt, but if that isn’t an option right now, you can ask your lender to increase your limit. This doesn’t reduce the amount owed, but by reducing the percentage of debt to limit, it looks better on paper.

These are a few ways to improve your credit score in a shorter period of time. However, sometimes improving your score does take time and you need to start planning well in advance of wanting to purchase a home. For an FHA loan, your credit score needs to be at least 580 and most lenders want at least 620 or more, so by knowing where you stand, you have a better understanding of your ability to purchase one of the new homes in Lakeville MN. If you are ready, contact us today to help get you started on the road to owning your first home.

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