How To Prepare Your Credit When Buying A House?
Purchasing a home is a big financial decision. Your credit score plays a big role in the homebuying process. It's important to position yourself in the best way possible when the time comes. In this video I will go over the 3 main things a underwriter will be looking for during the homebuying process. Additionally I will give you 7 tips on how to build, and maintain your credit. If you are looking to purchase a home in the near future or have ANY questions please leave a comment below, or get in contact with me today.
3 Main Things a Underwriter Will Be Looking For During The Home Buying Process.
1. Payment history- The underwriter will be looking to see if you have made all of your payments on time.
2. Credit utilization- This is the amount of credit you are using compared to the amount of credit you have available. It's important to keep this number low, ideally below 30%.
3. Length of credit history- The underwriter will want to see a long history of responsible credit use.
7 Tips To Build Your Credit
1. Make all of your payments on time- This includes your rent, utilities, credit cards, etc. Payment history is the number one factor in your credit score.
2. Keep your credit utilization low- As mentioned above, it's important to keep this number below 30%.
3. Don't close unused credit cards- This may seem counterintuitive, but closing unused credit cards can actually hurt your credit score.
4. Use a mix of different types of credit- Installment loans, like car loans, and revolving credit, like credit cards, show that you can manage different types of debt responsibly.
5. Check your credit report regularly- You are entitled to one free credit report per year from each of the three major credit bureaus. Check for errors and dispute any that you find.
6.Limit your applications for new credit- Every time you apply for new credit, it results in a hard inquiry on your credit report. Too many hard inquiries can hurt your score.
7. Have a plan to pay off your debt- If you are carrying high balances on your credit cards, create a plan to pay them off as quickly as possible. A debt management plan can also help you get your debt under control.
If you are looking to purchase a home in the near future or have ANY questions please leave a comment below, or get in contact with me today.
I hope this information was helpful. Stay tuned for more tips and tricks on home buying!