Get Closer to Homeownership

If your goal is to get closer to homeownership and you have a couple of obstacles in your way, we’ve compiled some helpful information to help you out! Maybe you don’t have money to use for a down payment, or maybe your credit score isn’t where it needs to be. That’s OK, help is on the way! If lacking money for a down payment is your only obstacle, there are options to help you out. If bad credit is an obstacle, with some time, effort, and on time payments, you can raise that score to where it needs to be. We would love to help you get closer to homeownership, be sure to reach out to us when you are ready or have any questions!

Down Payment Assistance

One way to get closer to homeownership, is through Down Payment Assistance . The Texas State Affordable Housing Corporation (TSAHC), can help both first-time home buyers and repeat buyers purchase a home. They are a nonprofit organization that was created by the Texas Legislature to help Texans achieve their dream of homeownership. You will need to fill out some information on their website to see if you qualify. 

Credit Repair

Another way to get closer to homeownership, is through credit repair.  If your credit score keeping you from homeownership, here are some great tips to help raise your credit score. There are a lot of companies that can help you do the same thing, however you will have to pay them to do so. If you go through this process yourself, you will learn more about taking care of your credit. Also, it feels really good to see that score as it raises from all the hard work you put into cleaning it up.

There is no need to reinvent the wheel, so I got these tips off of the Nerdwallet Website. For more information on each step, be sure to check out their page for more in depth details. 

1. Pay credit card balances strategically.

Use less than 30% of your limit on any card, and lower is better. The highest scorers use less than 7%. You want to make sure your balance is low when the card issuer reports it to the credit bureaus, because that’s what is used in calculating your score. A simple way to do that is to pay down the balance before the billing cycle ends or to pay several times throughout the month to always keep your balance low.

Impact: Highly influential. 

Time commitment: Low to medium. 

How fast it could work: Fast. As soon as your credit card reports a lower balance to the credit bureaus, that lower utilization will be used in calculating your score.

2. Ask for higher credit limits.

When your credit limit goes up and your balance stays the same, it instantly lowers your overall credit utilization, which can improve your credit. If your income has gone up or you’ve added more years of positive credit experience, you have a decent shot at getting a higher limit.

Impact: Highly influential

Time commitment: Low

How fast it could work: Fast. 

3.Become an authorized user.

If a relative or friend has a credit card account with a high credit limit and a good history of on-time payments, ask to be added as an authorized user. That adds the account to your credit reports, so its credit limit can help your utilization. Also called “credit piggybacking,” authorized user status allows you to benefit from the primary user’s positive payment history. The account holder doesn’t have to let you use the card — or even give you the account number — for your credit to improve.

Impact: Potentially high

Time commitment: Low to medium. 

4. Pay bills on time.

No strategy to improve your credit will be effective if you pay late. Worse, late payments can stay on your credit reports for 7½ years.If you miss a payment by 30 days or more, call the creditor immediately. 

Impact: Highly influential. 

Time commitment: Low

How fast it could work: This varies

5. Dispute credit report errors.

A mistake on one of your credit reports could be pulling down your score. Disputing credit report errors can help you quickly improve your credit.

You’re entitled to free reports from each of the three major credit bureaus. 

Impact: Varies

Time commitment: Medium to high

How fast it could work: Varies. The credit bureaus have 30 days to investigate and respond. 

6. Deal with collections accounts.

We would love to be a part of your home buying process. If you have any questions about buying your first home, we would love to help you. Feel free to contact us any time.

Paying off a collections account removes the threat that you will be sued over the debt, and you may be able to persuade the collection agency to stop reporting the debt once you pay it. You can also remove collections accounts from your credit reports if they aren’t accurate or are too old to be listed.

Impact: Varies

Time commitment: Medium

How fast it could work: Moderately quickly

7. Use a secured credit card.

Another way to build or rebuild your credit is with a secured credit card. This type of card is backed by a cash deposit; you pay it upfront and the deposit amount is usually the same as your credit limit. You use it like a normal credit card, and your on-time payments help build your credit.

Impact: Varies.

Time commitment: Medium

How fast it could work: Several months

8. Get credit for rent and utility payments.

Rent reporting services can add your on-time rent payments to your credit reports. Rent payments are not considered by every scoring model — VantageScores include them but FICO 8 does not, for example. Even so, if a would-be creditor looks at your reports, rent records will be there, and a long record of consistent payments can only help.

Experian Boost also can help. You link bank accounts to the free Boost service, which then scans for payments to streaming services, phone and utility bills as well as eligible rent payments. You choose which payments you want added to your Experian credit report. If a creditor pulls your FICO 8 using Experian data, you get the benefit of that additional payment history.

Impact: Varies.

Time commitment: Low. 

How fast it could work: Boost works instantly, but the rent reporting aspect of it, as with rent reporting services, will vary based on a consumer’s history. For example, some services offer an instant “lookback” of the past two years of payments, but without that, it could take some months to build a record of on-time payments.

9. Add to your credit mix.

An additional credit account in good standing may help your credit, particularly if it is a type of credit you don’t already have.

If you have only credit cards, consider getting a loan; a credit-builder loan can be a low-cost option. 

Impact: Varies. 

Time commitment: Medium. 

How fast it could work: Fast. As soon as the new account’s activity is reported to the credit bureaus, it can start to benefit you.

We would love to help you get closer to homeownership. If you have any questions we would love to help you in any way we can. Feel free to contact us today!

 

Check out our next BLOG POST  Tuesday, January 17, 2023!