Tip #1: Plan at least SIX - NINE months ahead to review and, IF NECESSARY, fix your credit report.
Like anything worthwhile, improving your credit score will take time. But you can't change your credit score if you don't know something is wrong in the first place. If you give yourself enough time, you can correct any mistakes and change up any bad habits.
Pulling and reviewing your credit report ahead of time can save YOU money and time once you elect to enter the housing market. Email me now for more details on a no obligation credit analysis.
Tip #2: Use 20 Percent or less of your revolving credit.
Know your credit line high limits and manage your credit line balances accordingly. For example, if you have a credit card with a $2,000 high limit - manage the balance to around $400 per month. Optimum management is 10% of credit line.
High credit achievers keep a low balance on credit cards and loans.
Tip# 3: Keep old credit cards OPEN.
Established, good payment history is valuable. If you have had a credit card for 5-10 years and have always paid on time that is a good sign that you are responsible to lenders.
Closing an old credit card reduces your available credit and increases your balance-to-limit ratio. This is a sign of risk which could lower your credit score.
The lower the credit score, the higher the mortgage rate in many instances.
Tip #4: Limit your credit inquiries.
Keeping your credit cards open and active is one thing but you should not run out and apply for 3 cards all at once. Also, applying for different accounts in a short period of time (such as an auto, credit, unsecured bank note, a mortgage, a boat, etc. etc.) can be a detriment to your score.
Credit inquiries can look very risky to lenders if they see that you have applied and were denied for multiple lines of credit in a short period of time.
Reserve your credit inquiries for a specific event (s) and purpose.
Tip #5: No MAJOR purchases (auto) six months prior to applying for a home loan.
Inquiries do matter and purchasing a vehicle (boat; timeshare; etc) prior to your home loan can affect your home loan in two different ways.
Credit inquiries can and will reduce the credit score AND if you increase your monthly debts, this will impact your DTI (Debt to Income) ratio and you may qualify for less home OR even disqualify you.
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Purchasing or refinancing your home will be one of your major financial decisions in your lifetime. Do yourself a favor and plan accordingly!
You can order your FREE credit reports from www.annualcreditreport.com --you get 1 free credit report from all three credit bureaus every 12 months.
Craig Turley is a mortgage and finance consultant. He has over 20 years professional business, finance, and management experience as an entrepreneur and corporate executive. Craig is a 1993 graduate of the University of Arizona with a degree in Business Administration, emphasis finance.
Craig Turley
480-385-1422 (office)
480-385-1450 (Fax)
602-930-2529 (cell)
NMLS #80917
CA-DOC 80917
AZ LO #0920382
