How to Establish Credit to Obtain a Mortgage Loan
In order to pursue your dream of owning a home, you will have to establish a good credit history. This will not be built overnight and for this reason, you will need to make smart choices in life, which will reflect a pattern of timely payments made out to all your creditors. With time, you will be able to prove your credit worthiness, and get the loan to buy your dream house.
Instructions
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Start by reviewing your credit report. This can be obtained for free once a year through the AnnualCreditReport.com, a government owned agency. You will need to check for any inconsistencies and dispute them, or in some cases, raise your credit score.
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2
Begin by opening a checking or savings account if you don’t already have one. Lenders usually gauge your financial health by going through these accounts. You need to show constant inflow and outflow of transactions, which will then enable you to build your credit score, and in turn make you eligible for obtaining a credit card.
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Credit card has become an essential measure to gauge a person’s financial stability. For starters, apply for a credit card which has a low interest rate. In certain cases, you can either apply for a secured credit card, where you deposit payments ahead in order to use the service. However, having a credit card alone won’t serve the purpose as you will need to use it to build your credit score.
The rule is to utilize it wisely. Use it for transactions, which you could have made easily with cash. For instance, whenever going out for grocery shopping, or filling your car tank, make payments through your credit card. Now make sure that you pay the amount at the end of each month. For your convenience, you can set up automatic payments where the bank deducts the amount from your checking account. -
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Pay all other bills on time. You will need to have a low debt to income ratio and for that to happen, ensure that you bring all your monthly debts to a minimum. If possible, pay out all payments at the end of each month. Not only it will have a positive impact on your credit rating, but will ensure that you are not accruing any interest.
