September 30, 2021
One of the biggest worries about buying a home? Having good enough credit to qualify. Do you know what it takes to raise your credit scores? Do you know what it takes to do so without paying a third party to do things on your behalf?
Improving your credit scores ahead of an FHA mortgage loan application requires time, which is why financial advisors say it’s best to start early when planning and saving for your loan.
Raising your credit scores means changing some basic habits associated with your payments, and getting into new habits can be an adjustment.
But that is not the reason why it takes time to repair your credit.
There are three basic issues you should be concerned with if you want to raise your score. They all have to do with consistency in your use of credit and how you repay your financial obligations.
You need to pay on time, you need to lower your credit utilization on your accounts as much as possible (30% of your credit limit or less is ideal according to multiple sources), and you need to establish a history of on-time payments and good credit use.
At least 12 months’ worth before applying for a mortgage is highly recommended.
But that is information that you can read in ANY mortgage-themed website or lender page. Here’s a not-so-well-known tip that can help you improve your credit over time incorporating some of the advice given above AND working with a credit reporting agency.
Notice we did NOT say “credit REPAIR” agency, but credit REPORTING agency. There is a trend among credit reporting agencies to help consumers raise their credit scores by subscribing or participating in certain programs.
One example–the credit reporting agency Experian offers a service to its users. Have you ever heard of adding certain monthly financial obligations to your credit report to raise your score? The Experian official site advises consumers they can get “credit for your phone and utility bills by adding positive payments to your Experian credit file.”
Not all credit reporting agencies offer this service, but this is a very good example of the kinds of outside-the-box thinking it can be helpful to try when working on your credit scores.
This sort of approach can also be good for those who have thin credit files or non-traditional credit and want to work on establishing a credit history.
Remember that if you pay for third-party credit repair, be wary of any service that offers to remove accurate negative credit information from your report–this will not happen no matter what they promise.
You are free to dispute any entry in your credit report but accurate information will not be removed as the result of such a dispute. Only incorrect information, outdated information, evidence of identity theft, and similar issues may be modified or removed from your report.
Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we’ll get you there in 9 steps.
Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner’s Insurance
Step 9: What to Expect at Closing
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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