Aside from saving for the down payment, first-time home buyers face another challenge in the process of buying a home. If these buyers were delinquent on student or car loan payments, their credit scores likely took some kind of hit over the years. First-time buyers are easily disqualified for credit scores, especially if they cannot save for 20% of the down payment amount. Here are some tips on boosting your credit score before you need to buy.
One factor lenders look at, aside from credit history, is payment history. If you’ve made payments on time for the past 12 months, you’re likely to see a benefit from that even if your credit is poor. Make sure your payments were all made within 30 days of the due date, or document any reasons why payments were made later.
If you can, legally remove delinquencies by reviewing your credit report and reporting any inaccuracies you find. Often times, debt is assigned to you under a name that is similar to yours but not your own. It’s not likely this has happened without your knowledge, but it is possible. Have you been declined credit cards recently under the assumption your credit score was high? If so, you might have delinquencies against you that don’t belong.
Become an Authorized User
Another option many people have at their disposal is to become an authorized user of a loved one’s credit card. It could be a parent, spouse or other immediate family member, but it’s important that the credit card report your scores to the credit bureaus. Otherwise, becoming an authorized user brings little to no benefit to you.