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By the numbers, Texas real estate market is hot. In the first quarter of 2022, home sales continued to grow by 3.4%. However, with interest rates on the rise, it is more important than ever for homeowners to manage their credit scores before applying for a loan.

A good credit score will make it easier to get approved for a home loan. Plus, higher scores generally result in better mortgage rates, saving you a lot of money over the life of your loan, particularly when interest rates are less favorable.

But how do you take control of your credit score before taking out a home loan? Keep reading for tips on how to fix your credit.

Know Where You’re Starting

If you want to take control of your credit score when taking out a mortgage, it’s important to know where you’re starting. This will give you an idea of how much you need to improve.

Most lenders will look at your FICO score. Many credit card companies give you access to your credit score for free. If yours doesn’t, there are other companies that can give you an estimate.

You may also want to figure out what credit score your mortgage company is looking for. If you aren’t already working with a lender, you can figure out what your aim should be.

In general, you’ll need a minimum credit score of at least 500 to 700. Most lenders want borrowers to have a credit score of at least 620. Keep in mind that certain programs like FHA loans may have different requirements.

Examine Your Credit Report

It is critical that you take a look at your credit report as well. This contains all of the information that is used to figure out your credit score. Lenders may also look at it to see a more detailed view of your credit history.

You can get a free copy of your credit report from each of the three credit bureaus each year. Go through each one and make sure there aren’t any errors on them. If you find any, make sure to make a dispute immediately.

Pay on Time

It’s critical that you make all of your payments on time. This includes credit cards, installment loans, and even utility bills.

When you do so, make sure to always pay at least the minimum payment. Setting up automatic payments can make it easier.

Pay Down Debt

One of the factors that affect your credit score is your credit utilization rate. This is a percentage of how much credit you are using compared to how much you have available across all revolving credit lines. In general, you should aim for your credit utilization rate to be under 30%.

Paying down debt is a great way to improve your credit score. You can also ask for a credit limit increase from your credit card company. Finally, replacing your credit card debt with a personal loan can also be helpful.

Follow These Credit Tips

Getting your credit score under control is a key step in getting ready to apply for a home loan. With some simple steps, you can improve your credit score, making it easier to get approved for a loan and saving you money on interest.

If you’re ready to talk to a home loan advisor, contact Trinity Oaks Mortgage today!

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