How to Build a Great Credit Report

If you're starting to save on a down payment for your home, you’ll want to build credit in the meantime. To get your credit report 100 percent ready to go, here are simple tips and tricks.

It's important to remember your credit report and credit score aren’t the same—but they’re definitely similar. Your credit report is your history of all the borrowing you’ve done but your credit score is the number that represents it.

To get your credit report in tip-top shape before home buying, here are some ideas for you to consider:

• Spread out time between other big loans and a mortgage. If you’ve recently taken out a car loan, student loans or anything similar, you’ll want to hold off on those applications.

• Building credit isn’t hard. You can keep your balances low—keeping a balance under 30 percent of your card’s total limit is recommended. Make sure you make your monthly payments on time for your credit cards. You’ll get better credit if you have a long history of borrowing.

• To piggy-back off of this, you might think it’s a good idea to close accounts once you get the balance to zero but don’t! Leaving them open is often a better idea as lenders will want to see your credit history. Those without any credit are often viewed as high-risk.

• Finally, if you are interested in applying for a mortgage by mid-2018, within the next year, you’ll want to do whatever you can to reduce the overall amount of debt you carry. This will make sure your debt to income (DTI) ratio isn’t too high. The maximum debt-to-income ratio for buying a home is 43 percent.

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