To get the best interest rate for your home loan and qualify for conventional financing, you need to have a high credit score. Credit scores range from 300 for bad credit to 850 for the best credit. Good credit scores are classified as 680 and higher. 

There are several things you can do to boost your credit score. Start by checking your credit with a loan officer or log onto www.annualcreditreport.com

Federal law allows you to get a free copy of your credit report every 12 months from each of the three credit reporting companies; Equifax, Experian, and Transunion. By reviewing your credit report, you can ensure that the information on your credit reports is correct and up to date. Reviewing credit reports regularly, can help you catch signs of identity theft early.

In addition to home loans, credit reports may affect, credit card approvals, apartment requests, or even your job application.

Payment history is a significant factor to raise your credit score, so pay your bills on time. Late payments, tax liens, judgments, bankruptcy, and charge offs impact your credit score negatively. It can take years for serious delinquencies to drop from your credit report.

Keep your credit card balances below 50% of your credit limit. The credit reporting companies evaluate the amount of debt you have compared to your credit limits.

Don’t close out old credit cards. An insufficient credit history may affect your score negatively, but factors like timely payments with a long history and low balances can offset that.

Many scoring systems consider whether you have applied for credit recently by looking at “inquiries” on your credit report. Applying for new credit can have a negative effect on your score.

Limit the number of credit cards that you have. Too many credit card accounts may have a negative effect on your score. Pay off the lowest balances first, to reduce the number of open accounts with balances.

If you are thinking of buying a home in 2020, talk to a loan officer now to discuss your credit and get personal advice to improve your score. An experienced real estate agent can recommend a good loan officer.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.