Posted on: 11 March 2015
A real estate's main job is to show you homes you might want to buy, but their job isn't complete until the sale is finalized. Part of completing the sale is getting you approved for a mortgage, and for that, you need a strong credit score. Here's what they want you to know so that your score is as high as possible.
Applying for New Credit Can Cost You Big
You might receive an amazing offer for a new credit card with a low interest rate and enough bonus miles for a free trip to Europe. Don't take it if you're about to buy a house.
Each application reduces your credit, and each new credit card reduces the length of your credit history and brings down your credit score as well. Just a small change in your credit score can cost you thousands of dollars in additional interest on your mortgage, so skip new credit cards until you've closed on your home.
Big Balances Can Hurt You
Paying your credit cards in full each month is a good thing, but it might not be enough. If your spending is heavy, your credit score might be taking a dip even if you never pay a dime in interest.
How? The percent of your credit limits you're using is one of the biggest factors in your credit score. If you're spending $800 a month but only have a $1,000 credit limit, your credit score will drop for having a card that's nearly maxed out. Keep your credit card balances below 30% of the limit at all times for the best score.
Sometimes You Can Improve It Just By Asking
Do you have late payments, collections, or other negative information on your credit report? Sometimes you can get that creditor to take it off just by asking nicely.
Why would they do this? Maybe you're a long-time valued customer that made a single mistake and they want to keep working with you in the future. Maybe you tried to make it right by making sure you paid them back even if you could have gotten away with not paying.
Write the creditor a letter that explains that you value your relationship, that you made a mistake, and that you've taken steps to correct the mistake. They don't have to say yes to removing the negative information, but if they do, your credit score could jump significantly.
Want to learn more about home buying, mortgage approvals, or credit scores? Contact a local real estate broker today.Share