A Few Tips to Establish and Maintain High Ratings

Recent tallies show a third of U.S. credit scores fall below 649. While not impossible, acquiring a mortgage loan will likely be more difficult and more expensive at this level than with higher scores.  Its up to you to manager your credit score to purchase your first home.

Here are the fundamentals to guide you in establishing and maintain a healthy and legitimate score.

The somewhat obvious:

  • Borrow only what you can afford to repay
  • Make all of your payments on time.
  • Avoid excessive request or inquires for credit
  • Have an emergency account to pay for unexpected expenses.
  • Check your report annually to contest and remove any erroneous information

The not so obvious:

Do not open new store credit cards just to save on a purchase. New accounts can lower your score, and too many payments can be difficult to manage. Saving 10% on a $300 lawn more means little if it costs you even just fractionally more on a $300,000 home loan

Do not open new accounts just to transfer balances for introductory rate. In addition to possible lowering your score, these offers often have traps. Instead, use them to leverage a lower rate from you existing card company.

Do not close old accounts. If you have a good record of payments on old accounts, these will benefit your score. Using them occasionally and conservatively will keep them active and contribute toward a good score.

Do not be afraid to use credit. Without the use of credit, you will have no score and that can just be as bad as a low credit score.

Keep a high credit line and a low balance. Credit utilization rations measure this relationship and lower is better.

Maintain a variety of account types. A combination of revolving, installment and secured financing along with excellent records of payment history will yield a higher scores. Still, don’t run out and open an account just to have diversity, as this is the least influential factor.

Remember, if you have questions about managing your credit or what is the required credit score to purchase a home for you would be, The Mortgage Lady is here to help. Contact Me Today for your preapproval.

Learn more on how to monitor your credit here.