The cannabis industry is booming in the United States and beyond, and employees of this robust economy often benefit from job security and a steady income.
If you’re part of the cannabis industry and you’re interested in becoming a homeowner, you may be on the search for ways to improve your credit score before applying for a mortgage loan. Improving your score will help you lock down a desirable interest rate, so it’s one of the most important components to work on before applying. Here, we share tips to help you boost your score so your application is as strong as possible.
Make timely payments
When you’re preparing to purchase a home, be sure to pay close attention to your bill payment schedule and make timely payments. Late payments have a significant impact on your credit score, and a pattern of late payments will take a toll on your creditworthiness. To simplify the process, consider signing up for automatic bill pay so you won’t have to worry about keeping track of multiple deadlines.
Focus on paying down debt
When applying for a mortgage, most lenders like to see a debt-to-income ratio of 43 percent or lower. To achieve this, you’ll need to ensure that you’re carrying as little debt as possible. As a general guideline, it’s recommended to utilize 30 percent or less of your available credit. If your accounts are currently above 30 percent utilization, make an effort to pay down the debt as aggressively as possible while meeting your other financial obligations.
Once your score is up and you’re getting closer to applying, you may be curious about other ways to prove your creditworthiness. If you’re self-employed within the cannabis industry, it’s essential to have a detailed record of your current and past earnings. In most cases, you’ll need to gather personal tax returns from the past two years. If you own a cannabis dispensary or other type of business within the industry, your lender will want to see two years of complete business income tax returns. Additionally, you’ll want to avoid attempting to use undeposited cash as a down payment. If you have cash on hand that you’d like to use as a down payment, be sure to make the deposit at least two full statement cycles before the lender reviews your information.
Even if you have an exemplary credit score, some lenders are not able to offer financing for this type of employment which can be frustrating. Check with different lenders to see what they are able to offer.
By Michaela Phillips. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.579.5517, e-mail email@example.com or visit michaelaphillips.com. NMLS: 312874.