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Your FICO credit score is perhaps the most important thing when it comes to purchasing a home. It determines what kind of loan you can qualify for and whether you can access your equity down the road. Lenders want to see a score that indicates good credit history, so if you are considering buying a house in the near future but need to improve your credit score, here are 4 useful tips.

  1. Check Your Credit Score – Make sure you give your credit report a thorough review to make sure there are no errors, and to give you an idea of what is dragging your score down so you know what to work on. If there are inaccuracies on your report, take action as soon as possible to rectify it.
  2. Lower Your Debt-to-Credit Ratio – This number describes how much your creditors are willing to loan you vs. how much you’ve used. The lower the percentage of available credit you are using, the higher your credit score will be. Raising your score is much more likely if you are able to reduce this ratio without creating more debt.
  3. Reduce Loan Balances – Making extra payments or payments higher than the minimum on your credit cards can go a long way towards reducing loan balances, and also raising your credit score. Paying off large loans like car loans can have a big effect on your debt-to-credit ratio.
  4. Make All Payments on Time – A single late bill payment can have a negative impact on your credit score. Make sure you’re paying all your payments on time, especially ones related to credit agencies. This includes your car payment, credit card bills, or even your rent if your landlord reports to a credit agency.