Buying Next Year? Fix Your Credit Now

Next spring may seem like a long way off, but if you’re buying in 2022, you’ll need to start working on your credit now.

Unfortunately, improving your credit won’t happen overnight, so here’s what you can do today:

Review your credit reports and take action, if needed. Since you can view each of your three credit reports at AnnualCreditReport.com three times a year, review your reports regularly before next spring. When you look at your reports, keep an eye out for mistakes.

Keep your credit card balances low. In the next few months, be mindful of the balances on your credit cards. Just by paying attention to your balances and tracking your spending you can keep your balances low and also cut down on the finance charges on each of your cards.

Better yet, pay off all of your balances. A lender will view you as less of a credit risk if you have less debt. Generally, you’ll want your recurring monthly debts and liabilities (credit card debt, housing expenses, etc.) to be less than 36 percent of your gross monthly income.

Don’t have late payments. Late payments can greatly affect your credit score so do your absolute best to pay your bills on time. Since your payment history is 35 percent of your credit score, if you’re late on any payments, anything else you do to improve your score may be negated.

Don’t close unused credit accounts. Closing an unused or little-credit account can hurt your credit. Generally, a borrower’s ideal debt-to-credit ratio is 35 percent or lower. If you close credit accounts, that ratio is going to go up, which in turn is likely to hurt your credit score.

Make a plan with your professionals. Your mortgage professional and financial advisor can be a huge help in improving your credit. Although it may be a bit too early to start the actual mortgage process, it’s not too early to ask for help.

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For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

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