We’ve all been there.  Well, hoped we be there.  We’ve all set timelines for ourselves and thought, “I should have xyz by now” or “I thought I would be in a position to do xyz.

One of those variables may have been buying a house this summer.  You’re hoping to stop wasting your money on rent and start putting money into your own asset, but a few hurdles got in the way.  One of them may be your credit score.

Of course, there are many steps to take before you even begin looking for a home and for most of us, that’s going to be obtaining a loan of some sort and finding out how much you can borrow.  This will be heavily determined by your current income, down payment and credit score—which is where some people fall short and give up.

To get a loan, and to get a loan quickly, you as a potential homebuyer need to keep an eye on your finances and credit.

Our experience over the years of working with preferred and qualified lenders has supplied us with a list of basics for you to refer to when monitoring and building your credit.

  1. Always, always pay on time.  No lender likes to lend money knowing that an individual has a repeated record of skipping payments.  This indicates a lack of discipline and poor financial management.  If it’s just a matter of discipline, enroll in AutoPay, set a calendar and keep track of what you owe and when.  This can account for up to 40% of your FICO score.
  2. Keep a good debt-to-income ratio.  Someone with a good ratio has unsecured outstanding credit that is below 50 percent of their annual salary.  Try keeping your credit card balances within half of the allowed limit.  If your limit is $10,000, restrict your statement to $5,000.
  3. Pay high interest loans first.  Typically, personal loans have the highest interest, so it’s wise to pay those off first since they don’t create any type of asset for you.  Home loans, on the other hand, are an asset and can be paid off over a longer period of time.
  4. Check your credit report.  This can be done at minimal cost or you can obtain it from the official FICO site.  Checking at least once a year will help you seek any clarification that is needed or  allow you to correct any mistakes that have been made.
  5. Let them know if you can’t pay on time.  Most often, people know in advance if they’re going to be late on a payment.  If you do, taking action to notify the institution can reduce any penalties or late fees and make a good impression.

This will all take time, but if home ownership is your goal, use these tips to help build your credit and obtain a loan more easily.