If you’re an aspiring homeowner with a penchant for property, one of the first things to consider before you start the fun part of house hunting, is the not-so-fun part. Also known as assessing your credit score, this is a crucial part of the buying chain that will ensure that when it comes to applying for that all-important mortgage, you’re in as good a place as possible.
And while there are a wealth of ways in which a credit score can be badly impacted – from late credit card payments to unpaid phone bills – so too are there steps you can take to improve your credit rating.
So, if 2020 is the year you want to land your own slice of real estate idyll, here are five simple steps that you can take today to improve your credit score.
Pay your bills on time
While paying your bills on time may seem like an obvious thing to do, ignoring them until they’re overdue is something that many of us are guilty of doing. Paying late or settling an account for less than what you originally agreed to pay can negatively affect credit scores, and how reliably you pay your bills is something that all lenders are interested in, particularly when a sizeable mortgage is at stake.
Pay off your debt
Mortgage companies won’t look favourably on applicants who have outstanding debt – whether in the form of unpaid credit card or multiple loans. Ensure that, if you do have any official debt, you’re making the agreed repayments each and every month; and if you’re in a position to pay your debt off sooner, do so.
Don’t close unused credit cards
Keeping unused credit cards open—as long as they’re not costing you money in annual fees — is a canny strategy when it comes to upping your credit rating, because closing an account may increase your credit utilization ratio. Owing the same amount but having fewer open accounts may lower your credit scores.
Keep credit card balances low
There’s no doubt that many credit card owners fall into the trap of occasionally splurging more than they can really afford on so-called ‘necessities’, that, let’s face it, ain’t all that necessary. By getting into the habit of only using your credit card when needed, and ensuring your balance is low, you’ll be one step closer to the kind of credit rating that will mean owning a property could turn from a dream into a reality.