Thinking about buying soon? Make sure your credit is in order!

By
Real Estate Agent with The Brandon Group SA00079841

There’s no more important time to work on your credit score than when you’re about to apply for a mortgage. Improving your credit can save you a ton of money—we’re talking about thousands of dollars over the life of the loan. Here are the actions you can take that will have a notable impact on your score.

Pay down your credit card balances 

Credit utilization is one of the biggest factors in determining your credit score. Your credit utilization should at least be less than 30 percent of your limit, and it’s even better if you can get it below 15 percent. This rule applies to both individual cards and your overall credit limit. It may even be worthwhile to use some of the cash funds you were planning to use for a down payment to pay off credit card balances.

Do no harm 

While you certainly want to improve your score if possible, at the very least you’ll want to keep it steady. Avoid opening new lines of credit if you’re applying for a mortgage in the very near future. This will cause a hard inquiry to show up on your credit report.

Take care of negative items 

It’s good practice to check your credit report for negative items a few times a year—you can get one free report from each of the three major bureaus (Experian, Equifax, and TransUnion) per year. If you find any negative items (collections, late payments, etc.), write a letter to the original creditor. Explain the circumstances that led to the negative item, and request that it be removed from your report. It can be surprisingly effective, and removing a negative item will improve your credit score in a hurry. You can find some good templates for a request letter online.

 

Lenore Cottrell, Realtor™ of The Brandon Group
CONTACT- 4793207222        EMAIL ME        ONLINE        FACEBOOK        TWITTER

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Ambassador
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I wish you the best in your marketing efforts.

Nov 27, 2016 09:54 AM #1
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Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Lenore, great post to those buyers contemplating a purchase and wondering if their credit is enough to buy.

Nov 27, 2016 02:15 PM #2
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hi, Lenore!  You are so right.  Keeping your credit tidy is a great idea.

Nov 29, 2016 07:36 AM #3
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Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

I think, it is important any time to keep your liabilities as low as possible. I worked with short sales and saw people loosing houses because credit card debts.... 

Nov 30, 2016 08:47 AM #4
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Lenore Cottrell

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