The Condo Mania Team
5 Ways to Improve Your Credit Score
Unfortunately, your credit score is an important key to getting a mortgage loan and unfortunately stops some of our first time condo buyers from buying their first place. Have bad credit? Time to move on in the right direction, and follow these steps.
- Never miss a payment. One of the best ways to improve your credit score is to have automatic checking account withdrawals for bills and credit card payments. Just make sure that there are enough funds in your checking account to cover all your automatic drafts. Approach your bill paying like a business and take it seriously.
- Use credit, but not too much. Believe it or not, having available credit is actually a positive factor. Get credit cards and keep them for a long period of time. You don't have to hold a balance -- paying off credit card balances every month still gives you positive payment history. If you want to apply for a mortgage within the next year, try to reduce any high debt load, and don't owe more than 50% of your credit limit on any one credit card. For example, if your credit card limit is $10,000, reduce your debt to at least under $5000 and preferably under $3,000.
- Clean up credit errors. If you have any errors on your credit reports, you need to dispute the information in order to clear your record. Each of the three credit reporting bureaus (Equifax, Experian and Transunion) have dispute forms on their website. Your lender may be able to get a "rapid rescore" if you have documentation proving errors on your credit report.
- Don't open new credit lines before your condo purchase. Every time you open a new credit line, your credit score will suffer slightly. Hold off on getting new credit cards, credit lines (like at a furniture store) or buying a car on credit until after you buy that next house or refinance. Also, your new credit line may change your debt-to-income ratio which is used by the bank to determine if you have more debts than they think you can handle.
- Resolve to do better. Ok, so your credit report has a few delinquent payments that you wished never happened. What do you do? Besides resolving to never miss any more payments, you must pay everything on time for the next year before your credit will show improvement.
The Federal Trade Commission warns against enlisting companies who promise to improve your credit score by removing missed payments. Correct data cannot be removed from your credit report.
We can give you some names of mortgage professionals that can advise you on steps to get credit-worthy. Contact us when you are ready!
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Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.
The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.
Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.
Last Updated: 2021-10-17 06:54:11