The process of buying a home doesn’t just begin when you make an offer – it starts long before that. One of the first stops on the road to home ownership is figuring out your finances, and that includes understanding your credit, a critical piece of the buying puzzle.
Whether your credit is in need of an overhaul or you’re looking to preserve your stellar score, now is the time to address your creditworthiness so you can position yourself to get the best mortgage at the best rate. Here are 8 steps to take to strengthen and solidify your credit score.
1. Get Your Hands On Your Credit Report – If you don’t have a current one, get your credit report now. You need to be aware that problems exist before you can solve them – and serious issues, and sometimes even minor ones, can take months to repair. There are a variety of ways to get your report, and you’re entitled to a free one from each of the three credit bureaus once a year under the FACT Act; just go to Annual Credit Report website to retrieve it.
2. Stay Current – Pay your bills on time – It sounds like a no-brainer, but if you’re looking to increase those scores over time in a clear and steady upward climb, never miss a payment. Ever!
3. Pay Over The Bottom Line – Another credit building tip is to always make more than the minimum payments on your revolving credits each month. A history of minimum-only payments is not a positive indicator for anyone reviewing your credit report. Always pay more – even if it’s just a little bit. Not only will you be chipping away at your balances faster, but you’ll save money on the total amount of interest handed over to your bank.
4. Maintain Low Balances – Some say the best way to keep you score afloat is to avoid carrying a balance that’s over 30% of your limit on each card, so pay those debts down below that halfway mark as soon as possible.
5. Don’t Move It, Lose It – Pay off the debt on your existing card, don’t just move it to a new one. The credit card companies have caught on to consumers who try to reduce balances by shifting them back and forth between cards,
and while they’ll still let you do it, they’ll charge you hefty fees. Incurring the extra cost is simply not worth the benefit. You’ll pay off debt quicker (and you’ll have less of it) if you just work hard to pay off what’s on the card you already have.
6. Cutting Cards – As with juggling debt, there’s a lot of controversy regarding whether you should close paid-off accounts. I say it’s better to play it safe than sorry: pay off all your credit cards, but don’t close any of them prior to applying for a mortgage.
7. Buying A Car Can Put A Dent In Your Credit Score – It’s best to avoid any big changes your finances right before a home purchase. That means no big purchases on credit, like buying a car or charging an expensive vacation. Any significant buys can alter your financial picture, and banks don’t like to see sudden changes just before approving a loan.
8. Plan Waaay Ahead – If you think you can get your credit spruced up and ready to go in a matter of days, think again. Even without any dings on your report, you’ll want to make sure all your credit cards are paid up prior to qualifying for a loan, and that requires planning. Get ahead of the game by paying down your debt, then try and lock up your credit cards until your credit score has been checked and you have been approved for your mortgage.
Once you have your financing ready then it’s time to get ahold of me so I can put together a list of available homes that fit your needs. Please feel free to call or text me at 918-313-0408 with any question you may have. I look forward to hearing from you and helping you find the perfect home.
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Posted on June 3, 2015 at 4:30 pm by John Cantero (918) 313-0408