4 Credit Tips Every Homebuyer Must Know
A low credit score equals a higher interest rate, which equals living in your parents’ basement for the foreseeable future. If this is you, don’t panic! I’ve got some tips to get your credit in fighting shape before applying for a mortgage.
Look up – and yes, this seems like a big ‘duh’ but – your credit score.
We know we’re supposed to go to the doctor annually for a checkup, right? Well, same goes for your credit score. It also needs to be checked at least annually. Two sites that I love are Mint.com and Credit Karma, where you can look up your score and get a big picture look at what makes up your score and address any discrepancies that might exist. And unlike the doctor’s office, you don’t have to take off your clothes to do it 😉
Make Payments on Time and don’t skip payments.
Everyone has that one friend that’s late to everything. Don’t be that friend when it comes to paying your bills. Pay them on time! If you have to, set up auto payments or bill pay through your bank. And as far as skipping payments, mistakes happen. But one late payment will weigh down your credit score and will stay on your credit report for SEVEN YEARS. Just remember, the power company is not your bestie, so if you’re consistently late on payments, it’ll affect your credit score, and leave you in the dark. (BLACKOUT) Literally.
The old rule of thumb was to keep your credit usage under 30% of your available credit. But your best bet? Keep your balances as low as possible. When you can, make more than the minimum monthly payment.
And don’t take on NEW debt!
When you’re getting ready to sign on the dotted line, the last thing you want to do is take out an auto loan or open up a brand spankin’ new IKEA credit card and go nuts buying everything in the showroom in anticipation of your new home. Save it for after you’ve closed, then buy all the Swedish furniture your heart desires.
And lastly, Don’t Leave Your Job.
Now is not the time for the I-feel-stuck-so-I’m-going-to-take-time-to-find-myself job quitting episode we all feel at one point or another. Inconsistency in your income and the difficulty it causes in keeping up with payments will leave lenders questioning whether or not to entrust you to make payments on a very large sum of money. So, if you’re just itching to ditch your current job to make custom sandalwood beard combs from your garage, it’s best to wait until after you have house keys in hand.
So remember, before you buy a house, get your financial house in order first. If you have questions, talk to one of our personal loan consultants. We’ll help you identify the areas that need attention most to get your credit score mortgage ready. Repairing your credit can mean the difference between your own home and your parents’ basement.