Whether you’re a first-time buyer or someone looking for a lucrative real estate investment in New Jersey, improving your credit score could make a substantial difference in the mortgage rate and terms you receive when buying a house. It’s also a crucial step in the home-buying process, especially in a competitive real estate market like New Jersey. The whole process may take several months to a year, depending on your financial situation and the steps you take to improve it.
Here are some of our recommendations to guide you on how to improve your credit score to buy a house in the Garden State.
Check your credit report
To do so, obtain a free copy of your credit report from the three major credit bureaus: Experian, Equifax, and TransUnion. Review the report for errors or discrepancies that may affect your score.
Settle Your Bills on Time
Ensure you pay all your bills – including credit cards, utilities, and loans – on time. Consider setting up automatic payments to avoid missing due dates.
Maintain and Reduce Your Credit Card Balance
High credit card balances may hurt your credit utilization ratio. Although often easier said than done, you need to adjust your credit usage to keep your credit utilization below 30% of your total available credit. That way, you’ll be able to afford bill payments and eliminate existing balances.
Keep Your Old Accounts to Maintain Your Credit History
The length of your credit history matters. Keep older accounts open and active to show a long history of responsible credit management. Don’t be tempted into closing an old account as this may shorten your credit history and negatively impact your credit score.
Have a Diverse Set of Credit Accounts
Having a variety of credit accounts such as credit cards, installment loans, and a mortgage may positively affect your credit score. However, don’t open new accounts just to diversify; only take on new credit if you need it and can manage it responsibly.
Be Strategic in Your Expenses and Debt
Consider the debt snowball method (paying off smallest debts first) or the debt avalanche method (paying off highest interest debts first) to reduce your overall debt efficiently.
THINGS TO CONSIDER BEFORE THE HOME PURCHASE
New Jersey’s real estate market offers a range of options, from bustling urban areas to serene suburban communities. At the start of your home-buying process in the Garden State, below are some things to keep in mind:
- Know which New Jersey city or community you’ll be investing in, or at least, your top five.
- Consider how investing in real estate will impact your long-term financial health.
- Start saving for your down payment – the more you save, the better your mortgage options.
Need assistance in improving your credit score for a better chance at finding your New Jersey dream home at the most ideal mortgage terms? Working with a knowledgeable real estate agent ensures valuable insights. Consult with our team at Frank DeZao Homes to get started. Call us at 201.953.9376 or send us a message here.