Chat with us, powered by LiveChat

Is there really a way to increase or fix credit scores? If there is, what is the best way to fix credit to buy a house?

Generally speaking…

buying a house is a very complicated transaction. Most home buyers cannot afford to pay for a home in full price, so they often have to use their credit for mortgage deals or avail of financial assistance.

Not everyone has access to their credit or can get loans approved mainly because their credit scores are low.

Banks are not inclined to offer mortgage deals to clients with bad credit, but there is hope. There are ways that credit scores can be fixed and increased.

Repairing Credit To Buy A Home

Best Way to Fix Credit to Buy a House

Being in debt is the worst place you can be when purchasing real estate, but there are a lot of ways for you to improve your credit score. As such, you can eventually leverage that to buy a house.

The absolute best way to fix credit to buy a house is to pay off all your debts and remove negative inquires from your credit report. When you pay all your debts, your credit score immediately improves.

Paying all your debt is easier said than done.

Likewise, paying off debt is not a magic pill that will instantly fix your credit score. There are also a few other ways that you can fix your credit over time.

Related: Can Lexington Law Credit Service Remove Hard Inquires?

 

 

Repairing Credit To Buy A Home

1. Know Your Credit Report

One of the first things that a buyer should do is know their credit score. It’s not just about getting the actual score or number.

Familiarizing yourself with how it got to that point, what payments and credit lines contributed to the score, and how long you’ve had that score.

Related: Is 500 a bad credit score for buying a house?

It’s important to get the most recent credit report. These reports are given out yearly, but they are updated every month. You can actually request an updated credit report from your bank or a credit bureau.

Knowing your credit report can also help you understand how you go in that particular financial hole. It can also help you understand why it got that bad and how to avoid the same mistakes in the future.

You can also track back your spending and see where you spent too much, how much you can save, and how much you can pay your debt over time.

You just have to know how to read and analyze your credit report and use it to benefit your future finances.

Related: Is 600 a good credit to buy a home?
 

2. Pay Your Bills on Time

One of the primary reasons credit scores get bad is overdue bills. Just a few overdue bills can have a significant effect on your credit score.

Luckily, this can be remedied easily by paying your bills on time. After a few months of paying your bills ahead of the due date, you will already see a difference on your credit score.

It is important to remember to pay all your bills on time. This means all the bills on your house, your services, payments on your car, and even your phone bill.

Late payments to all of these drag down your credit score, but at the same time, if you pay all your bills ahead of schedule, it also adds up and lifts your credit score for that month.
 

3. Pay More Than the Due Payment

One of the best ways to improve or fix your credit score is to pay more than the minimum amount for your bills. Paying on time is reviewed for your score, they also look at the amount you paid.

If you have a long history of only paying the minimum amount due, this will not reflect well on your credit score. You can help your score by paying over what’s due, even if it’s just a little amount over the minimum.

By paying more than the minimum, you can help your credit score improve. If you do this for consecutive months, the score will also increase with each payment.

Aside from improving your credit score, this also helps you pay debt a lot faster. Not only are you paying off more of your debt, but you are also decreasing the amount of interest that you owe your bank.
 

4. Open a New Account

Opening a new bank account may sound counterintuitive at first, but it is actually another best way to fix credit to buy a house. When you open a new account, this increases the total outstanding credit line, which helps in your overall utilization.

Having another account, even just a simple credit card account of a different type can help in improving your score because it indicates that you can handle different kinds of accounts.

Before you open up one, two, or even three more accounts, you still have to keep in mind that these accounts will still have monthly dues and payments.

Just because you have a new account, it does not mean that you can use that account to accumulate more debt.

Opening a new account means you need to have the discipline not to use your new line of credit. It is also worth mentioning that having a bad credit report might not bode well in opening a new account, and you might not even have an easy time getting another account.
 

Bottom Line

When it comes to buying a new house, having a great credit score is one of the best ways to secure financial help.

Let’s admit it: not all of us have an excellent credit report. Most of us have low or bad credit scores.

The good news is that there are ways to fix and improve your score in order to make a home purchase. Most of these techniques are sure to improve your credit score, but it will take discipline, diligence, and most of all, a lot of patience.

Do remember that buying a house is a big investment, and it is something worth waiting for. If done correctly and maintained, you can get closer to purchasing your dream house.

James Willaims
 

Hey There, James here. I am the co-founder and editor of this site. I have over 10 years experience in business and 5 in the credit repair world