Protect your credit first
Ready to make a big purchase, like a home or a car? Before you get sucked into the Zillow scroll hole, follow these five crucial steps to protect your credit and potentially save tens of thousands of dollars on your colossal buy. Trust us, future-you will thank present-you for being credit smart.
5 steps to protect your credit
Shows like House Hunters excite us about finding our dream home, and Dream Home Makeover tempts us to transform it into a personal oasis. However, these shows conveniently skip over the crucial steps you need to take before diving into the real estate market.
Aside from having a sizeable down payment, securing a low mortgage interest rate is the next best thing for your wallet. What is the secret to scoring that low interest rate? A stellar credit score.
So, before you set up those filters on Realtor.com, follow these five steps to protect your credit and save a bundle. After all, who wants to pay extra interest when you could spend that money on making your home truly fabulous?
1. Check your credit scores
The last thing you want to do is apply for a mortgage without knowing your credit score; otherwise, you might be in for a shock as unpleasant as discovering your dream home is built on a sinkhole. The good news is that all three credit rating agencies, Experian, TransUnion, and Equifax, still offer free weekly credit reports! So, there’s no reason not to know.
The first step to protecting your credit is to find out your current score. If your score is 700 or higher (on the 501 to 850 scale), congratulations. You’re in good shape; the following steps will help keep it that way. Don’t worry if your score is 699 or lower; these steps will help you boost it.
Either way, once you know your credit score, you’ll clearly understand where you stand. With that knowledge, you can confidently plan your path to homeownership and avoid any nasty surprises along the way.
2. Check and clean up your credit report
Credit reports are like detailed biographies of our financial lives, starting from the moment we first dipped our toes into the credit pool. Experian, TransUnion, and Equifax are the three agencies that compile and maintain these reports. When you request a loan, these agencies share your credit report with lenders, who use it to assess how risky you are as a borrower. Your loan approvals and interest rates hinge on your creditworthiness.
However, credit reports can become inaccurate over time, like a game of financial telephone. This is why checking your credit report regularly is essential, even when you’re not planning to buy a home. Start by reviewing your identification information, such as your name, address, and Social Security Number, to ensure everything is accurate.
Next, hunt for discrepancies, like accounts that don’t belong to you or suspiciously high account balances. Also, check for outdated negative marks, as most should disappear after seven years (unlike that awkward teenage phase that seems to last forever).
If you find incorrect or outdated information, dispute it with the credit rating agencies—Experian, TransUnion, and Equifax. With patience, these corrections can improve credit scores, making you a more attractive borrower. Plus, it’s nice to know your financial biography accurately reflects your credit prowess.
3. Protect your credit report, credit score, and identity
After tidying up your credit report, the next step is safeguarding it, along with your credit score and identity. Identity theft is becoming as common as avocado toast, and thieves are getting increasingly creative as more of our personal and financial information moves online.
Following these five steps will go a long way toward protecting your credit report, credit score, and identity, but in today’s fast-paced world, you can’t be too proactive. That’s why applying for credit protection and monitoring services is crucial. These services can act like a digital guard dog, alerting you to suspicious activity and helping to keep your financial reputation intact.
4. Monitor your credit report and credit score
Next, make it a habit to regularly monitor your credit report and credit score to safeguard your financial health and secure those coveted low mortgage rates. Think of it as your financial check-up—because the sooner you spot something fishy, the quicker you can act to investigate and correct it. With everything moving at lightning speed online, every moment counts in the battle to protect your credit. After all, nobody wants a surprise blemish on their credit report, especially when you’re eyeing that dream home.
5. Use tools to assess and manage your finances
The best thing about today’s technology is the wealth of excellent tools available to help us assess and manage our money. Too many people avoid looking at their finances because it’s intimidating, but with the right tools, you can stay on track with your goals—like buying a new home.
Find the tools that work for you and make them your financial sidekicks. With everything organized in one place, managing your money becomes a breeze, and you’ll be ready to tackle those big purchases confidently.
You can’t be too aggressive when applying for a mortgage and snagging the lowest rate possible. Likewise, you can’t be too vigilant when protecting your credit. By following these five tips, you’ll stay on the right track, keeping your credit score and stress levels low. After all, who wouldn’t want to avoid financial surprises while hunting for their dream home?
Navigating the path to homeownership doesn’t have to feel like an epic quest. By knowing your credit score, regularly checking your credit report for inaccuracies, and using today’s financial tools, you can set yourself up for success. Just like you wouldn’t walk into a haunted house without a flashlight, don’t dive into the real estate market without a clear picture of your financial health.
Remember, securing that low mortgage rate and protecting your credit isn’t just about being cautious—it’s about being intelligent and proactive. So, embrace your inner financial superhero, follow these tips, and watch your dream of homeownership become a reality. And hey, with the money you save, you might even afford an extra avocado toast or two.
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