Buyers tip of the week!

It is important to have a high credit score. But more importantly you should have good overall credit. Starting with the basics, what is a credit score and credit report? When applying for credit, companies consult one of two central reporting agencies – Equifax or Trans Union. Equifax, the larger of the two, is most commonly used. Whenever a lending company extends credit they report to either Equifax or Trans Union or both, on your credit limit, credit used, and status of repayment. A person’s total score and report are based on all the creditors’ information combined together. There are a couple of options for checking your own credit score. You can have a certified Mortgage Broker get your report for you OR you can do it yourself. If you choose to do it yourself you can purchase your credit report directly from Equifax. Equifax will also have suggestions on how to increase your credit rating. The advantage of checking your score yourself is that your report and score are unblemished. When another institution or company checks your score it will affect your score negatively to a small degree. Whether you order your own report or you have a broker do it for you …know your score. To qualify for the best mortgage rates and products you will want to ensure that you have at least 2 accounts that have been active for at least 2 years. Ideally your credit score would be north of 680. It is possible to work with less, but your options may be more limited. If your score and report need some work, what can be done?

1. Pay bills on time. While this may seem like a bit of a no-brainer, it is the basic foundation of a good score and a good report. Nothing will hurt your score more than consistently missing payments.

2. Low balances. Credit cards and other revolving credit facilities are very important methods of establishing your credit. However high balances will hurt your score. They also tell lenders that you might be a client who overuses credit, whether that is the case or not. Keeping your balance to less than 50%, will help you improve your score, while going above 75% can hurt it.

3. Pay Quickly. Pay off your high balances as fast as you can – preferably monthly. At the very minimum, make sure you are keeping up with your minimum payments

4. “Flash” your Cards. All credit card companies will automatically pay your monthly charges if you phone to request this. It’s a great way to eliminate interest charges, and it builds your credit rating fairly quickly

5. What you need. Do not seek more credit just for the sake of it. Opening new accounts lowers the average age of your existing accounts, which can bring down your score. Don’t be a credit glutton

6. Old accounts are good. That old account you don’t use anymore that you were considering closing? DON’T! Unless there is something terribly wrong with that account, closing an older account will again reduce the average age of your accounts. Use the account now and then to keep it current, but again, make sure to pay your bills on time.

7. Eliminate Errors. Nobody is perfect. Not even the companies who are responsible for reporting your credit usage. If you find an error in your report you can have it removed by contacting Equifax.

8. Last but not least don’t be afraid to seek credit counseling! It is a great way to get help and on the road to buying a new home!

I hope this helps and as always enjoy!!
Laura Goldberg ABR SFR GRI, BPOR, e-pro
Classic Properties
Cell/Text 352-327-2997
Fax: 866-591-3002 toll free
I am passionate about Real Estate !!

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