Improving Your Credit Score Before Applying for a Mortgage: Part 2

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You've been working to improve your credit score before you apply for that home mortgage. That's a good thing, but there's still a few things you need to do.

Two months before you plan to apply for a home loan, do (or don't do) these three things:

Pay Down Your Credit Card Debts

Start paying down the balances on your credit cards. The higher the ratio of balance to limit (as in, you have used less of the available limit), the better your credit score will be. Lenders want to see that you are handling your money responsibly. Make larger payments on your credit card balances so you can get those balances lower.

Don't Use Your Credit Cards

Don't add more debt to your credit card balances. Keep in mind that you want the lender to take a chance on loaning you a large amount of money for a long time period. Not only do you want your credit reports to reflect that you are disciplined in your spending, you really do need to be. Start now with establishing good spending habits so you can handle that mortgage payment. Pay with cash when you buy things or choose not to buy at all.

Don't Make Use of a Credit Limit Increase

A credit limit increase on your credit cards can improve your credit score by showing a better ratio of available limit to debt. The trick with this, though, is to make sure you don't use that increased limit. If you receive a credit limit increase, let it sit.

If you are planning to apply for a home loan, it's important to start working toward improving your credit score in advance. Start several months ahead of time to get that credit score up and also to establish good spending and money management habits. You won't be sorry for the improvements in your overall financial status, even if it takes a little longer to get that mortgage you want.

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