Main Content

Boost Your Credit Score Before Buying a Home

When buying a house, one of the most important considerations is your credit score. Unless you pay in cash, a credit score can impact whether you qualify for a home – especially one in the luxury market. Luckily, there are steps you can take to significantly boost your good credit score further and get the best interest rates on your luxury home loan. Learn how to review your credit report, how to report corrections, and what steps to take to bring your credit standing to the highest possible levels. Building your score can take time, but it is well worth the effort when you decide to buy your luxury home.
Buying the home of your dreams often tops everyone’s bucket list. Purchasing a property in the luxury market doesn’t just require a massive investment, however. It also requires a different approach than you would take when purchasing a conventional home.
Key differences in applying for a loan in the luxury home market can impact how a lender views you as a loan applicant. It can also make a difference in how long it takes for your loan to be approved. Allow me to give you a few tips for buying a house in the luxury market:

Luxury homebuyers often have the funds to purchase the home in cash. This is not to say that you shouldn’t be shrewd about the benefits of taking out a mortgage.

When seeking a mortgage for a luxury home loan, the first thing lenders will check is your credit score. Maintaining a credit score of at least 680 would be great. But getting a top score of between 760-850 will almost certainly ensure you quickly get approved for the loan you’re seeking. Better scores also translate to the best interest rates and can speed up approval.
As an experienced East Bay Realtor, I can help you improve your credit score so you needn’t wait too long before you can buy your dream home.

HOW TO CHECK YOUR CREDIT SCORE

Preserving your stellar score takes a bit of effort. Checking on your credit status every so often is important because it will allow you to detect and report any inaccurate transactions.
The official credit site, annualcreditreport.com allows people to view their own credit report once yearly free of charge. When you secure a copy of your report, inspect it carefully for any errors in your personal details.
Make sure all essential information such as your social security number and previous addresses are accurate, as even one small error in any of these details can potentially harm your score.
As you go through your transactions, make sure to take note of any errors you spot, and have them fixed as well. Moreover, don’t wait till the last minute to check your scores; do it as early as six to seven months before you apply for a mortgage so you have time to get any discrepancies fixed.
Nationwide credit bureaus like TransUnion, Experian, and Equifax maintain your credit records. Check your score with all three, since they can be slightly different from each other, and you never know which one the lender will use.

CORRECTING CREDIT ERRORS 

A stellar score is a measure of your creditworthiness, so you need to get any errors corrected. Unfortunately, some types of errors can be more difficult than others to get amended. Major errors such as a false bankruptcy claim or a credit account that isn’t yours could signal identity theft. You must quickly report this to the Federal Trade Commission.
For smaller errors such as a false credit limit or late payment recorded on your account, get in touch with the creditor. Submit a report to the credit bureau too. Gather and send any relevant documentation to prove your claim. Opening up a dispute can seem like a needless hassle but is one of the easiest ways to improve your credit score.

AVOID SIGNIFICANT PURCHASES

If you don’t want to significantly hurt your credit score, don’t make any big-ticket purchases before you apply for a home loan. Don’t charge expenses such as the purchase of a new luxury car, plane, or yacht, for instance. And don’t take a luxury cruise or go on a dream vacation on credit, either. Any significant expenses that you incur are likely to be frowned on by lenders. Banks generally don’t appreciate seeing changes in your financial picture right before applying for a loan or when a loan is in process.

REDUCE YOUR UTILIZATION RATIO

One key detail you must seek to understand is your utilization ratio. This figure is the percentage of credit that is actively in use. As an example, if your credit card has $100,000 in available credit, and you have a balance of $50,000, then your utilization ratio will be 50%. You reduce this percentage by paying off some of the balance.
Rather than closing accounts, you should pay off balances. Older accounts can look good on a credit report. The best practice is to keep credit accounts that show a good payment history open. If you want access to the best luxury East Bay homes for sale and intend to take out a loan to buy one of them, then you need to make sure that your utilization ratio is in check.
If you are looking to purchase luxury San Francisco real estate in the East Bay, following these steps can improve your score and give you access to the best rates.

Are you thinking of buying a home in the Bay Area? If you need someone who has exceptional negotiating skills and will work exceedingly hard to get you the luxury home of your dreams, count on me and my team. Call 510.406.4836 or email to JouJou.Chawla@ChawlaRealEstate.com to get started.