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First Home Buyer’s Guide To Boosting Credit

First Home Buyer’s Guide To Boosting Credit

 

One of the most essential determining factors in getting a mortgage is your credit score. Having a good credit allows you to get a low interest rate which means, you’ll end up paying less for your home mortgage. Below are some tips to help you get a better score and rate according to your financial standing.

Following these suggestions doesn’t mean instant boost to your credit score though, but they could make a better impact within three months and may help you create good practices that will ultimately improve your credit status. It is important to understand that each individual situation is not the same and it is advisable to check on your own score with a credit reporting agency.

Daily Practice Tips

Some simple everyday practices can possibly do something to improve your credit score in the long run and keep it for good.

  • Paying your bills on time, on a consistent basis. Delinquent payment of your rent, credit cards, utility and medical bills including other services make a negative impact on your credit standing. Thus, it is important to keep in mind not to delay payment of basic bills.
  • Keeping credit card accounts active.  This maybe challenging as the use of available credit is tempting. But it makes a good impact on your credit score when you have a history of well maintained active accounts.
  • Keeping a good debt-to-credit ratio. You can achieve this by maintaining credit card balances below 25% of the total limit.

Settling Debt Issues

One of the best things you can do to improve your credit score is to settle your problematic accounts.  Your total credit score is made up of 35% of your payment history and 30% of debt amount. Unsettled issues with your accounts can consequently put your score down.

You can start working your way to repairing your credit score by paying off past- due accounts a priority focusing on those that have been long overdue for 90 days and beyond. Creditors usually make a corresponding honest adjustment on your credit history by taking the late payment report off your credit history.  This usually ushers in progress to your credit score.

Keeping Credit Line Open

Taking out loans for cars, electronics and other items when you’re about to apply for a home mortgage can be detrimental to your score. If you’re planning for a first home mortgage, it is critical not to open another line of credit with a new balance as it would add up to your overall debt conversely decreasing your credit score. Closing your existing credit lines is not advisable either.

Settling your balances while keeping your line of credit open is generally a good way to reduce total debt which will ultimately result to a good debt-to-credit ratio. In short, the lower percentage of debt over available credit will create a positive impact on your over-all score.

While the above mentioned tips can help you generally make a difference to your credit score, it is always best to sit down with a financial adviser who can help you design a personalized plan for credit improvement. Doing this will not only help improve your future mortgage costs, but also identify potential lenders that could cater to your needs.

The loan officers at Simple Fast Mortgage are trained to help you identify your credit challenges and assist you in making changes to benefit your credit score and ultimately your mortgage loan rate. This will enable you to benefit with big savings over time throughout the term of your loan.

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