CREDIT PREPARATION 101

CREDIT PREPARATION 101
JOHN OCCHI, HEMET REALTOR

When we want to buy a house, there are several things that we must do in order to prepare ourselves..  we all know that buying a house is never as simple as driving to the mall and buying a new pair of shoes - although I am not certain which one you might look at more options than the other...but that's another story.

No, to buy a house most of us know that we will need some money in the bank - both for the purchase and for reserves.  Then we should all know that we need a fairly stable job and lastly we need to have a good credit score - or at least as good as possible.

I'm not going to spend time here explaining what a credit score is, if you don't know, the do a Google Search (Experian, Equifax, and Trans Union are the 3 national Bureaus) and figure it out elsewhere.  I will say that figuring out the exact methodology used by the bureaus are like figuring out how each of the 3 big search engines (Google, yahoo & MSN) rank pages for their search engines - they all have their secret algorithms and they are not sharing with us or each other!

I will say before I get going,,. that there are always options to any shortcoming - cash, job or even credit.  Just remember, whenever you exercise an option to get around one of the ‘typical' hurdles that you are paying for it - usually in more ways than one and usually for a long time to come.

What I want to discuss here is how you can improve your credit score and clean up a blemish or two that you might have.

First you want to examine your credit reports early in the process.  I'm sure you know there are 3 different bureaus and they will all provide you with free access to your report once a year.  Again do a Google search, because the contact information constantly changes.  If you find any mistakes, ask the bureau's to remove them, immediately.

Make sure all of your PAID accounts are reported and that there are no duplicate entries - this happens sometimes when husbands and wives combine credit or maiden names are changed to married ones.

Don't over extend yourself - for any reason.  Keep your outstanding credit less than half of the available balance - AT ALL TIMES.  This show fiscal constraint and the credit score gurus love that.  Try to minimize your credit card use to 3 or 4 cards and make sure you pay all of your bill on time and in full, when due.

Pay your taxes and child support / alimony if you have to.  Avoid civil judgments', and if you get sued, pay it off within 30 days so that it is not recorded against you.

I mentioned a job earlier.  If at all possible be on your job a solid 2 years before you apply for a mortgage - longer is better.  If you have to change jobs, make sure it is in the same career field and an upward move that generates at least 10% more income - 25% is better.

If you have a line of credit - pay it off.  This type of debt allows you to keep borrowing on the same debt over and over again and no one likes to see that, except the company doing that lending.

If you follow these guidelines and some good common sense you should be ready to shop for a mortgage in no time.

Happy House Hunting!

Now have a Blessed Day,

John Occhi, Hemet Realtor
http://www.johnocchi.com/