When it is time to buy a home for sale in the Hampton Roads area of Virginia, the most important thing is you credit score. If having a low credit score makes you want to put the brakes on your home buying dreams don’t lose hope. The main thing is to be patient and know that improving your credit won’t happen immediately.

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First of all, obtain your credit score from 1 of the 3 major credit bureaus, Equifax, Experian or TransUnion by going to www.annualcreditreport.com, where you can get them free once a year. After you’ve received your report, you can start taking these steps to improve your credit.

1. Check for Mistakes

Make sure that all your account balances are accurate. Verify that your name and date of birth are correct. Make sure there are no late or missing payments. Sometimes there are mistakes made on credit reports. If you see something that doesn’t look right, contact the bureau to dispute it.

2. Pay Bills On Time

Delinquent payments will have a negative effect on your report. Make sure you pay all bills on time to ensure they don’t end up affecting you negatively. Payment history makes up 35% of your credit score.

If you have lots of late bills, start with the oldest first. A bill that is delinquent by 90 days will have a greater affect that one that is 60 days late. If you have a debt that you can’t pay, call the company and see if they will work with you. Most creditors will settle the debt for less than what you owe. Nonetheless, it’s best to pay debts in full whenever possible, as it will have a more positive effect on your credit report than one that is settled.

3. Improve Your Debt-to-Credit Ratio

It’s important that you aren’t spending the maximum amount on your credit cards out each month. Credit bureaus may only pay attention to the amount you used even though you may be paying your balance in full. Don’t use more than 30% of your maximum credit limit. For example, on a $1000 credit card don’t use more than $300, even if you pay it on time and in full. If you really need more credit, ask your credit card company to increase your limit, allowing you to spend more while still staying below the 30% threshold.

Having multiple small balances across a number of different cards can actually hurt your score. Pay off those small balances and just use a few cards. You don’t want to close those other cards, though. Unused cards add to your overall credit limit. Here’s another example: If you have 3 cards each with a limit of $1000 and you have a balance of $900, then your debt-to-credit ratio is 30%. If you remove 1 card and still have a $900 balance between the remaining 2, your debt-to-credit ratio will become 45%. That’s why it’s important to simply keep the accounts you currently have open even if you don’t use them.

4. Minimize Credit Inquiries

Every time you apply for credit a potential lender is going to contact the credit bureaus for a copy of your credit report. Each of these inquiries is noted and can affect your credit score. Applying for multiple credit cards in a short period of time will negatively affect your score.

If you are shopping for a car, student or home loan, you may have numerous inquiries from different companies as you’re shopping around for different rates. Any inquiries made within 30 days of finding a loan will be counted as only 1 inquiry and won’t affect your score. For that reason, it’s very important to make sure that you keep your loan shopping within a 30-day time period.

Buying a home can seem like an overwhelming task, there are so many things to consider. You don’t have to navigate these waters alone. I’m here to help you get into the home of your dreams. Contact me today!

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