If you are considering buying a home (or a car, or a business, or anything else that requires a loan), be aware that lenders will use your credit score to determine whether to lend, how much to lend, and the cost of the loan. .
Because credit scores take into account so many variables, they can predict with great accuracy who is likely to repay loans and who is likely to default. Credit scores are based on the number of open accounts you have, your debt level, and your repayment history. Credit scores range from 300 to 850, with higher scores indicating greater creditworthiness. A good mark is considered 670 and above.
Your financial behavior affects your score. You can improve your score, but it’s not a quick process, so if you’re thinking about buying a home and need a loan, now is the time to figure out where you are and start consolidating. things if necessary.
You can check your credit rating at www.creditkarma.com. Some people think that you will damage your credit score by checking it regularly; you won’t. If banks or other financial institutions frequently check your score, it will send a wake-up call, but as an individual you can check your own score without negative consequences.
Pay your bills on time every time
The first and most important way to improve your credit score is to pay all of your bills on time every time. If you’re struggling to pay your bills on time, sign up for automatic payment. Most credit card companies, utilities, and other service providers with recurring bills are happy to set up automatic payments, so as long as you have money in the bank to cover automatic withdrawals, your credit score will benefit from this arrangement.
If you know your payment will be late for a reason like a family emergency, contact your creditor before your payment is due and explain the situation. As a loan manager, I can tell you that I have waived many late fees and chosen not to report late payments for those who contact me.
If, on the other hand, I have to hunt you down to get paid, I’m much less likely to be sympathetic. It always surprises me when people who haven’t answered my calls or answered my emails, burst into my office after receiving my pay or departure notice demanding a break. I’m not interested in your sob story if you’re rude, especially if you’re rude to the receptionist who doesn’t deserve your bad attitude. At this point, I don’t care how good the excuse for your late payment is.
Don’t Maximize Credit Cards
Another way to improve your credit score is to keep your credit usage at around 30% or less. This means that if you have a credit limit of $ 12,000, you don’t want your balance to go over or around $ 3,600. Lenders want you to have a cushion, so if something goes wrong, you can borrow against existing credit (rather than missing your payment).
Correct the mistakes
Finally, it’s important to periodically check your credit report and correct any errors you find. I once discovered that even though I paid on time, a lender marked my payments as overdue. Come find out that his company was penalizing debtors for his company’s inability to process payments in a timely manner. They immediately corrected their mistake and reported their mistake, improving my credit rating.
Often times, the better your credit score, the lower your fees and interest rates. A good credit score won’t allow you to borrow more than you can repay, but it will allow you to stretch your hard-earned dollars into a loan that could get you the home of your dreams.
If you have any questions about property management or real estate, please contact me at [email protected] or call (707) 462-4000. If you have an idea for a future column, please share it with me and if I use it I will send you a $ 25 gift certificate to Schat’s Bakery. To view previous articles, visit www.selzerrealty.com and click on “How’s the Market”.
Dick Selzer is a real estate broker who has worked in the field for over 45 years.