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Lending standards tightened slightly to end the year, according to the Mortgage Bankers Association. The Mortgage Bankers Association said the news is a reversal from the previous several months of credit loosening.

The news doesn’t necessarily mean homeownership is less available. Rather, it shows that lenders prefer applicants who are well prepared to purchase a home.

If you’re thinking about buying a home in the Fort Collins area, there are steps you can take today to rise above the competition and qualify for a loan that achieves your goals.

One crucial factor in the process involves your credit score, which weighs heavily in lending decisions.

If your credit score has held you back, here are five tips that can enhance it.

Test your limits

There’s no harm in asking your creditor for an increase to your limit – if you’re strategic about it.

An increase in your score should not be a green light to more spending. Instead, use this opportunity to lower your credit usage ratio, which is a big key to improving your credit.

Call your creditors and ask about the closing date

Make a list of all your accounts, then call each one and inquire about when balances are reported to credit bureaus.

This information lets you better time your payments. Paying on time means you’re not late, which is extremely important to your credit score. Paying before the closing date, however, has added benefits.

When you do pay before the closing date, there’s a better chance of this update making it to your credit report, which will positively impact your credit utilization rate.

Attack debt strategically

As mentioned above, the credit utilization ratio measures the amount of credit used in relation to how much is available. This overall number is important. The lower the rate, the more favorable.

It also counts on individual accounts. That is why it’s essential to tackle accounts with higher usage rates to boost your overall score sooner.

Pay twice

Big purchases are inevitable. A new fridge or another big-ticket item can put an immediate dent on credit availability.

This action will also spike your credit utilization ratio.

A good approach to this sudden and substantial use of credit is to make two payments, if possible. Two monthly payments chip away at the usage rate and soften the cost of compound interest.

Remember, your goal is to keep your credit balance low so you can remain financially nimble for future purchases and larger credit applications for the biggest purchase of your life.

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