How to Have (and Keep) Good Credit

 

So you found your dream home, and you’re ready to make an offer, but how is your credit? Before you move forward, make sure that you are up to date with your credit score and that you have already been in contact with a mortgage broker. Solid credit ratings enable you to have a better interest rate and stronger terms on your mortgage. According to Justin Carmichael of Guaranteed Rate, here is what you should do:

  • Pay your bills on time for your existing accounts. Even one 30-day late notice can affect your credit score.
  • Keep using your credit as you normally would. Changes can throw up a red flag.
  • Be in touch with your mortgage broker if you have any questions or concerns along the way.

And here’s what he advises NOT to do:

  • Do not apply for new credit (including co-signing a loan or applying for a new credit card), and do not close any credit card accounts. This will cause your score to go down.

  • Do not max out your credit cards. Pay balances across the board. Try not to use more than 30% of your available credit.
  • Don’t consolidate your debt on to one or two cards; this may read like you’re maxed out on the card.
  • Avoid transferring money between accounts and don’t withdraw or deposit large sums of money into your checking or savings accounts.
  • Try not to change jobs during this process. If this is unavoidable, speak with your mortgage broker.
  • Don’t allow any of your bank accounts to have insufficient funds.
  • Don’t have a friend or family members pay for any part of the purchase of your home; there are specific rules and guidelines that must be followed regarding gifts. Again, speak to your mortgage broker regarding these rules.
  • Don’t keep money you’re going to use for purchasing the house in a safe or in overseas accounts. Consult with your broker about when the best time is to move funds into a U.S. bank account beforehand.
  • Be protective of your personal information while purchasing or refinancing your home. Unnecessary additional credit reports could lower your credit scores.

One last thought – don’t wait until the last minute to check your credit. Be sure to give yourself time – even a year – so you’ll have enough time to correct any problems that might arise.

About Cindy Raney

Riverside Realty Group
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