1. Subscribe to a free credit monitoring app

Knowing where your score is right now and where the low points are has never been easier.  Apps like Credit Karma make it quick and easy to se your score. Best of all these apps do not count as a “hard credit pull” so you checking on your credit does not show on the credit reporting agencies.

2. Fix credit first or shop for mortgage?

It is best to consult a mortgage professional like the ones at MOR Lending.  With you score in-hand, they can tell you if you’ll qualify for a program with a good rate or if you need to work on your credit.  Even if your score is low, there are programs like FHA backed programs who are specifically targeted towards people who may have credit issues.  Fixing your credit is important, but grabbing low rates today is also important.  

3. Eliminate disputed accounts and fix errors

These take some time and homework to correct, but can be the easiest to overcome.  Most credit reporting agencies have easy step-by-step tutorials on how to challenge errors or disputed accounts.  In fact, Credit Karma has a built-in module for sending in challenges to information.  Other apps such as Experian offer the same ease.  Note that many lenders cannot process loans where disputed accounts exist and require them to be removed or resolved.

4. Pay down balances

The ratio of available credit to balances is one of the factors with the highest impacts on your credit score.  It counts for around 30% of your score.  Keeping these balances low will have an immediate impact on your score.  Even if you have a credit card that you do not use, consider leaving it open, but with a zero balance.  Don’t close accounts. This will help your ratio.

5. Pay bills on time

Late payments are another huge factor in your credit score and can account for another 30% of your score.  Look through your payment history and verify any late payments.  If something does not seem accurate, file a claim with the creditor and bureaus.  By law they must respond and investigate each claim.  Late payments can have an immediate impact on your score but paying on time will take several years to wipe out even one late payment. 

The Wrap Up

With the historically low rates of today, monitoring your credit has never been so important.  But do not let a low score dissuade you from buying a home. If you are a first-time home buyer, FHA-loans have no added fees for lower scores and can give you the best rates with scores as low as 600. Your best bet is to get an assessment of where your credit, income-to-debt ratio, and current rates are with the help of MOR and their Lending V.I.P.s.