Top 4 Ways to Improve your Credit Score when Buying a Home in the Tuscaloosa and Birmingham Area


Why is your credit score important when buying a home in the Tuscaloosa and Birmingham area?

Your credit score can give you an idea of whether you’ll qualify for a loan and what kind of interest rates you’ll pay when buying a home in the Tuscaloosa and Birmingham area. Loans are necessary for most home buyers in the Tuscaloosa and Birmingham area when they cannot afford to pay cash up front.This is why a credit score is such an important component to the home buying process in the Tuscaloosa and Birmingham area.

Also Read: Learn What You Can Afford When Buying a Home in the Tuscaloosa & Birmingham Area


In our previous blog, one of the effective ways of saving money for your next home in the Tuscaloosa and Birmingham area was to get your credit score in tip-top shape. If your DTI ratio is over 50%, you should be paying off your debt before thinking about buying a home.  Most lenders will want to see that you are managing your debt and keeping your credit card balances low to be more confident in you as a home buyer in the Tuscaloosa and Birmingham area.

DSEAYCOM has listed a few ways to improve your credit score, so you can qualify for a loan when you buy your next home in the Tuscaloosa and Birmingham area.

1.       Pay Off Your Credit Card Balances

One major factor in your credit score is how much revolving credit you have versus how much you're actually using. The smaller that percentage is, the better it is for your credit rating.

You could still have a higher utilization ratio than you'd expect, even if you pay balances in full every month because some issuers use the balance on your statement as the one reported to the bureau. Your credit score will still weigh your monthly balances, so gather up all of those credit cards on which you have small balances and pay them off. Select one or two go-to cards that you can use for everything;that way, you're not polluting your credit report with a lot of balances.

2.       Pay your bills on time, regularly.

If you've paid your bills late in the past, you can improve your credit score by starting to pay every bill on time and keeping balances low from now on.The biggest chunk of your credit score is based on your payment history and paying your bills on time is absolutely essential to get your credit score in good shape. If you're bad about paying your bills, it damages your credit and hurts your credit score.

Contact your lender if you cannot make payments on time. If you experience a job loss or other misfortune, contact your lenders right away. Explain your financial situation and agree on a new payment schedule that you can manage. Get the agreement in writing and ask them to include a note that your payments will not be reported as late.

3.       Dispute errors.

Dispute items on your credit report that are incorrect and deal directly with the vendor who reported the incorrect information. If for example, you paid off your car loan but it was not reported to the bureaus as paid by your bank,the bank should then report the correction.

For other types of reporting errors such as fraudulent use of your identity, provide all the forms of proof that you have to the bureaus, such as cancelled checks, stamped invoices, police reports, etc. Put everything in writing and follow up at least once per week by phone with the bureaus until the mistakes are corrected on your report.

4.       "Retire" your credit cards as you pay them off.

Too much credit can be a bad thing. Closing credit accounts can have a negative effect on your credit score; a better solution is to pay off excess cards and stop using them without closing the account. Cut up the card so you won't be tempted to use it.

Keeping your credit score in tip top shape is not an easy task. A credit score isn't like a race car, where you can rev the engine and almost instantly feel the result. Credit scores are more like your driving record: They take into account years of past behavior, not just your present actions. In addition to making the right moves, you also have to be consistent. The ideas listed above can move your score in the right direction.

If you're planning a major purchase like your next home in the Tuscaloosa and Birmingham area, don’t forget to follow our budgeting tips so you won’t be paying your bills late. Even if you're sitting on a pile of savings, a drop in your score could scuttle that dream deal.

Already a homeowner in the Tuscaloosa and Birmingham area? Check out our home improvement projects and tips at: DSEAYCOM Homeowner Tips and Blog

At DSEAYCOM, we’re happy to answer any questions you have about buying and selling in the Alabama area. Call us now or feel free to share our contact information with someone you know that needs expert help buying or selling their home.

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Derrick Seay
Derrick Seay