Maintaining Your Credit Score

Your credit score plays a huge part in the process of being approved to purchase a house. It's a good idea to talk to a mortgage lender and get preapproved for a home loan before you engage a real estate agent. Home values are rising, so you will want to be financially secure before you apply for a mortgage. Your mortgage lender will pull your credit report, go over your income and debts and let you know if you are able to be approved for a mortgage. If you are, he will work with you on the price range in which you are able to purchase. If not, he will make recommendations on what you need to do to get yourself in a financial position to be approved for a mortgage. Maintaining a good credit score throughout the process is extremely important.

Build Your Credit

First, you must have credit to establish a good credit score. Build your credit by opening accounts that report to all of the major credit bureaus. The sooner you can do this before purchasing a home, the sooner you'll establish a good credit score.

Time is a Factor

Your credit score is also based on how long you've had lines or credit or credit cards open. Don't close any of your credit cards or lines of credit unless your mortgage lender of credit counselor tells you to. According to an article on Experian.com, you need to have at least one account that is six months or older, and has credit activity on it during the past six months, to calculate a score on your credit report.

Pay Down What You Owe

If your credit score needs improvement, the best item on your agenda is to pay down or pay off your credit card or loan balances. This will help show that you have a higher percentage of available credit.

Past Mistakes

If you've had an eviction, a bankruptcy, a short sale or a foreclosure, it takes a certain number of years for those liens to come off your credit report and improve your score. According to an article on Experian.com, most negative marks like these will fall off your credit reports after seven years. Some can stay on as long as ten years. Consult with your mortgage lender or credit counselor as to how long you may have to wait before you can be approved for a mortgage. Your score will also be affected if you've had a car or anything else repossessed.

Pay Bills on Time

One of the most important ways to improve your credit score or maintain a good score is to pay your bills on time. If you have a long history of on-time payments, your score will be higher.  

Just Before Buying a House

Before you purchase a house, try not to use your credit cards. You may be excited to furnish your home, buy new appliances and invest in new decor. You may be tempted to improve your home value right away by hiring professionals and paying downpayments to them to do major renovations. This should all wait until after closing. Don't get a new car loan or lease either. Applying for new accounts such as a loan or a lease will lead to a hard inquiry on your credit, which will lower your score.

If you improve and maintain your credit score, you'll be in a better position to purchase a home. The process will be easier and less stressful as well.