10 Tips for Homebuyers to Improve Credit Scores

     

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    Having a great credit score will help home buyers to get a home loan easier!

    In this article, we have found these helpful and simple tips that should simplify and improve your home buying experience by strengthening your credit.

    Want to learn even more about improving your credit? We HIGHLY recommend you contact Aaron Jones of Credit Repair by Attorney

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    1) Always pay on time

    Lenders are more willing to loan out money to individuals who responsibly and consistently pay their payments on time. Frequently having late payments will also negatively impact your FICO score.

     

    2) Leave room in your credit

    Don’t max out your credit cards. Your outstanding unsecured credit should not be above 50% of your annual salary. Maintain your credit card balance within half of their limits. For example, if a credit card’s limit is $20,000, you should not spend more than $10,000.

     

    3) Pay dues in full on time

    As previously mentioned, on time payments are key as that affects about 40% of your credit score, but also important is making sure that your payments are paid in full. Paying in full and on time will show to lenders that you are responsible enough to handle the home loan payments.

     

    4) Use two credit cards if you use cards frequently.

    – This can be a negative because FICO does not consider spending money on two cards as one, but can be a helpful tip because it helps you to maintain your usage percentage. As with the example above. If you have a card that has $20,000 and you want to charge to it $15,000, this will leave you with only 25% remaining credit on your card. Dividing this into two cards could save you from surpassing the 50% rule.

     

    5) Maintain a healthy credit mix.

    -This means to have a mix of both “good” and “bad” loans. Home loans and business loans are thought of as “good,” while personal loans and credit are considered to be “bad.” Investing in a home loan could contribute to this healthy mix.

     

    6) Pay high-interest and small loans first

    -Paying home loans over a longer duration of time is a wise decision. However, it is best to pay personal loans, credit, and private loans first as they have higher interest and do not build assets as home loans do.

     

    7) Close unwanted savings accounts

    -Having unwanted savings accounts that have less than the Minimum Average Balance (MAB) can negatively impact your credit score, so do not forget to close any of these unwanted accounts.

     

    8) Frequently check credit reports

    -It is a small investment to obtain your credit report for the peace of mind and awareness that you receive from checking your score regularly. This way, you are always aware of any mistakes or discrepancies, as well as any other issues that may arise. Also, don’t forget to check your score at least once a year.

     

    9) Monitor co-signed joint accounts

    -Choosing a responsible co-signer is of the utmost importance. However, even with the most responsible co-signer, issues can arise. Always be aware of any co-signed accounts and verify that payments are being made on time.

     

    10) Negotiate if you cannot pay on time
    -Life happens sometimes, and even in the worst case scenarios, there is still something that can be done. This means if you cannot make your payment and know this ahead of time, you may be able to avoid a negative hit to your credit if you can negotiate with your bank. If you are a consistent and genuine customer, this might afford you a reduced EMI or extended loan period.

     

    For even more information about IMPROVING YOUR CREDIT, contact Aaron Jones of Credit Repair by Attorney at 909-944-7444 and tell him TBG HOMES sent you!

     

    Did you find this information helpful? We’d love to hear from you! Contact TBG Homes at (310) 432-5755 or TBGHomes@kw.com for more info about your real estate needs.

    Interested to know what your home might be worth? Check out our FREE and INSTANT home valuation tool at TBGHomeValues.com!

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