Credit Scores For Homebuyers

Lenders look at your credit score to determine whether to approve you for a home mortgage. Before lending, creditors want to know how much of a risk you are. The higher your credit score, the better your chances are for approval. However, raising your score takes time and persistence. The only quick-fixes are to pay down debt and to dispute successfully any inaccurate information on your credit report. Here are several recommendations for improving your credit score before applying for a mortgage:

1. Pay bills on time. Late payments drive down your credit score. If you have past-due bills, get current and stay current.

2. Obtain your credit report and correct any errors; you could be paying for someone else’s mistake. Check your credit report regularly.

3. Pay down credit card bills. Pay the balance monthly if you can. Transferring debt from one card to another doesn’t help and may lower your credit score.

4. Keep credit card balances low. High debt-to-credit-limit ratios drive your score down. Never “max out” your cards.

5. Don’t open new accounts as a way to change your debt-to-credit-limit ratios. Adding accounts too quickly sends a signal that you might not be responsibly handling your credit.

6. Don’t buy anything on credit for your new home, such as major appliances, until the loan is approved.

7. Closing an account doesn’t remove it from your report. Wait twelve months after a credit problem is resolved before applying for a mortgage. After a year, you’re penalized less.

8. Avoid finance companies. Even if you pay on time, interest is high.

9. Avoid any scam artists who promise a quick fix.

When you’re ready to buy or sell a property in the Chicago area, speak as quickly as possible with an experienced Chicago real estate lawyer. Unlike agents and brokers, a real estate lawyer isn’t paid by commission, so your lawyer is genuinely free to work for your best interests. If you hire a lawyer in a timely fashion, you’ll avoid major risks and ensure that all documents are accurate and compliant. You’ll have a trusted professional “watching your back” and guiding you through the transaction and closing. Real estate is a wise investment, and so is consulting with an experienced Chicago real estate lawyer. If you’re involved in or anticipating a real estate transaction in the Chicago area, make the call promptly.