Credit Check Alert! Score a Better Number with These Helpful Tips
Your credit score is indication of your history of debt repayment. In real estate, home buyers who have higher scores WILL procure a lower interest rate, which means they pay less over the life of the loan. Those with lower credit scores do pay a higher rate and some do not get approved at all.
The standard for an “excellent” score: 760+. If you’re looking to buy a home within the next year or two, you’ll want your credit in the best possible shape in order to qualify for the best possible rates.
Here are 6 Charlotte home buyer tips to get your credit in tip-top shape:
- Bulk Up Your Credit History: Establishing a line of credit is the first step to get your score off the ground. The best way to bulk up your credit history is through secured credit cards, personal loans, auto loans, or a mortgage.
- To Add You Must Subtract: Before you take any type of action on additional lines of credit – adding a new credit card, increasing debt limits or transferring balances – make sure you pay off the debt of the current card(s). Unloading that debt is the simplest method to keep your score on the staircase to the top because it lowers your credit utilization rate.
- Consider New Cards Wisely: You’ll want to proceed with caution on this tip. Because your credit score is calculated to find the credit utilization rate – the amount of credit you use versus the amount you have available – having more than one credit card may worth it. By opening a new card, you widen the gap between how much credit you have and how much owe. These days, credit card institutions send out offers on low-to-no interest cards almost weekly. Sift through the cards to determine which one has the most favorable rates over the long-term. Watch out for rates that rise after one year and any additional fees that might be incurred after the offer period has ended.
- Extend Your Credit Line: If opening up another credit card with a different company seems like too big of a jump (or you can’t trust yourself to keep spending down), then consider extending the line of credit on your current card. Remember to practice the same financial restraint with this card to ensure that you have the right balance between the amount you have available and the amount you owe. Asking for a line of credit – assuming you’ve been a good customer – might also be a good time to get a lower interest rate on the card.
- Utilize Automatic Payment Options: Did you know that just one late payment can damage your credit score by 20 points? Nearly all credit cards today have an automatic payment option or the ability to make a payment toward a loan at the same time each month. In our hectic lives, having to remember one less payment makes keeping your credit in check a breeze.
- Further Note on Additional Credit: A hard inquiry into your credit is standard protocol for both extending your credit line and opening new credit card accounts. Just remember that for the four to eight weeks it takes to complete the inquiry your credit score will be temporarily lower. Hint: Find credit cards that meet the above standards and have a high approval rating.
Bear in mind that if you are thinking of purchasing a Charlotte home in the next couple of months, the above advice is not for you! You will want to immediately contact an experienced lender who can guide you in the right direction without potentially damaging your credit score by opening up new accounts or canceling old ones. Opening credit accounts while in Escrow (under Contract on a home) is NOT recommended and can severely impair your ability to complete your purchase.
Curious if your credit score will make the cut? Give us a call at (704) 491-3310! As a real estate agent in our local community, we make it our job to know the expert mortgage brokers.
©Debe Maxwell | The Maxwell House Group Real Estate | SavvyBroker@me.com | 6 Charlotte Home Buyer Tips to Get Your Credit in Tip-Top Shape
The mystery of credit scores is always a tough nut to crack. If only we find a way to automate the reporting process to tell us on a monthly basis where we stand.