It’s no secret that lender’s restrictions have tightened up since the housing crisis. Today, they have gotten slightly better; however, they still have more requirements than ever before. So how can you maximize your borrowing power?

You have to start early. That’s the key! The sooner you start working on your qualifying factors, the better chance you have of borrowing more money. Lenders look at the big picture when deciding how much to lend to you. While they have minimum credit scores and maximum debt ratios set, they look at everything together to determine your risk level.

Read this guide to see the steps you can take to help you buy your dream home.

Maximize Your Credit Score

If there’s one thing most lenders look at first, it’s your credit score. It’s their first impression of your financial responsibility. Because of this, you want to make sure it’s as high as possible. You can start by looking at your credit history. You can obtain a free copy of your credit report from each of the three bureaus here.

Go through each report and look for the following:

  • Do you own each of the accounts listed? If not, dispute the accounts with the credit bureau and the company providing the debt. You may have been subjected to identity fraud or it could have just been a keying error. Either way, you need to get it off your credit report.
  • Are the payment histories accurate? Again, human mistakes happen. You may have late payments reporting that you never paid late. You’ll need proof of your timely payment. You’ll also need the time to get through the process with the credit bureau to prove your payments were on time.
  • Do you have too much of one type of debt? A large portion of your credit score is the type of debts you have. Ideally, you should have an equal mix of installment and revolving debt. If you notice you have a large amount of revolving debt compared to installment loans, start paying the debts down or off completely.
  • Do you have too much outstanding debt? Aside from the number of debts is the amount of revolving credit you have outstanding compared to the credit limit. Try to stick to 30% or less of your credit limit for the best results.