When it is time to purchase a home for sale in The Vistas, Summerlin, the most influential factor is you credit score. Having a low credit score can bring your home buying dreams to a screeching halt, but there is hope. The important thing is to have patience and realize that improving your credit won’t happen overnight.
First things first. Start by getting your credit score from one of the three major credit bureaus, Equifax, Experian or TranUnion. These can each be obtained for free once a year at annualcreditreport.com. Once you’ve acquired your score and know where you stand, you can start taking these steps to improve your credit.
1. Look for Inaccuracies in Your report
Sometimes, there are mistakes made on credit reports. Check that all account balances are correct, and make sure there are no late or missing payments. Also, be sure that things like your name and date of birth are correct. If you see something that doesn’t look right, look into it. If there is a legitimate mistake, you can dispute it with the credit bureau.
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2. Pay Off Bills
Payment history makes up 35% of your credit score, and for this reason it is an important part to consider. Delinquent payments will have an adverse effect on your report. It is important that you make sure you pay off all bills on time to ensure they don’t end up negatively affecting you.
If you have numerous late bills sitting on your desk, start with the oldest first. A bill that is delinquent by 90 days will have a greater affect that one that is 60 days late. If you have a debt that you cannot pay, call the company and see if they will work with you. Many creditors will settle the debt for a lower cost. However, whenever possible pay debts in full as a paid in full debt will have a more positive effect on your credit report than one that is settled.
3. Watch Your Debt-to-Credit Ratio
When using credit cards, it is important that you aren’t maxing them out every month. You may be paying your balance in full, but many credit bureaus only pay attention to the amount you used. A general rule of thumb is to not use more than 30% of your maximum credit limit. So on a $1000 card, you don't want to be using more than $300, even if you pay it on time and in full. If you really need more cash, ask your credit card company to increase your limit, allowing you to spend more while still staying below that 30% threshold.
Another thing to consider when it comes to credit cards is the number of them. Having multiple small balances across a number of different cards can actually hurt your score. So pay off those small balances and keep all your debt consolidated to just a few cards. However, don't close those other cards. Unused cards add to your overall credit limit. Let's say you have three cards each with a limit of $1000. If between the three you have a balance of $900 then your debt-to-credit ratio is 30%. If however you remove on card and still have a $900 balance between the remaining two your debt-to-credit ratio will become 45%. For this reason, it is important to simply keep existing accounts open even if you don't use them
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4. Keep Credit Inquiries Low
Every time you apply for credit a potential lender is going to inquire for a copy of your credit report. Each of these inquiries is noted and can affect your credit score. Applying for multiple credit cards in a short period of time will adversely affect your score. It sends the message to potential lenders that you are financially unstable or desperate. So it is important that you don’t just go around trying to get new cards.
Not all credit inquiries, however, are the same. If you are shopping for a car, student or home loan, you may have numerous inquiries from different companies as you look for different rates. Any inquiries made within 30 days of finding a loan will be counted as one inquiry and, therefore, will not affect your score, so it is important to make sure that you keep your rate shopping in a 30 day time period.
Buying a home can seem like a daunting task, there are so many variables to consider. Luckily, you don’t have to navigate these waters alone. The Ballen Group is standing by to help any way we can. Our experienced real estate agents have helped thousands of people in the Summerlin area get into the home of their dreams.