Make Sure Your Credit Is In Order If You Plan To Buy Soon

Dated: 02/21/2017

Views: 181

Image title

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.

Blog author image

Christi Buratti

Having been raised in Austin, I have a clear understanding of the uniqueness of each neighborhood and the surrounding communities. As a child, I used to help my dad, a custom homebuilder with the de....

Latest Blog Posts

Austin Real Estate Market Update September 2018

The Austin Board of REALTORS® just released the September 2018 Austin Market Report.  According to the report, September data shows a stall in home sales growth. Regardless, median home

Read More

How Appraisers Determine Value

Once a buyer and seller agree on a sales price, the contract is then sent to the lender for the loan approval process. One of the first things the lender will do is to order an independent.

Read More

Never skip a home inspection

Why You Should Never Skip the Home InspectionBuying a home can be expensive. It might feel like once you’ve entered escrow, you have new things to pay for at every turn. While the fees are

Read More