Your credit score is an important part of your financial history. It contains a detailed history of your credit history, including identifying information, debts, bankruptcies, late payments, and inquiries. You can view this document for free by requesting it from the three credit unions. It is also used by lenders, with your permission to determine your creditworthiness.
If your credit score is less than ideal, take steps to improve your credit score before buying a property:
Check Your Credit Report For Errors
Review your credit report from all three of the credit unions for any incorrect information. If an inaccuracy is found, report it to your lender and credit reporting agency as soon as possible. Common mistakes include:
- Clerical errors
- Loan or credit payments applied to the wrong account
- Accounts that have been reported more than once
Remember, checking your own credit report has no impact on your credit score.
Pay All Bills On Time
You know you must pay your bills on time in order to avoid late fees, but you should also pay them on time to keep your credit score healthy. This means not only utility and phone bills, but rent, student loan debt, credit card payments, and car payments.
Don’t Remove Old Debts
After you have paid off your debts like student loans, keep them on your credit report. Having that debt on your report could help your score as you have a record of paying off those loans on time, every time.
Get A Credit Card
Your credit score is also dependent on the type and mix of accounts you have. If you have not yet gotten a credit card, it is a good idea to do so in order to help improve your credit score before purchasing a property—especially if you are young and a first time buyer. Making on-time payments will keep your credit score healthy and if you have poor credit, you can open a secured credit card that requires a cash security deposit, reducing the risk to both you and the issuer.