Buying a home can be both an exciting and a nerve-wracking experience whether you intend to live in the home permanently or treat it as an investment by renting it out to others. Purchasing property can also be a complicated process, so making and keeping a plan before, during, and after a sale is imperative. By following these buying tips, buyers may have a better chance of having that mortgage application approved.
Check Your Current Credit Report for Errors
Checking for errors in your credit report is one of the first and most important things anyone can do. Did you know that Free copies of credit reports are issue by Annual Credit Report, which is a service operated by TransUnion, Equifax and Experian.
Pay Bills with Automatic Bill Pay
Missing payments for bills can significantly affect credit scores. One of the best ways to improve a credit score is to avoid missing payments altogether, you can do this by setting up automatic bill pay with you bank. People who have missed payments can easily get caught up, stay current and watch their credit improve in just 6 months.
Keep Borrowed Balances under Credit Limit
The amount you owe should always be less than the credit amount that is available to you. If you keeping the limit maxed out it can reduce credit scores up to 100 points, which can and most likely make the interest on you pay on your mortgage higher, and decrease the chances of getting the mortgage approved.
Don’t Apply for New Credit Cards to Increase Credit Limit
When someone opens new credit accounts to increase their credit or borrowing limit, it can really backfire on them. Opening up too many accounts throws up red flags for the rating companies, and credit scores are reduced. So it is best to not apply for any credit while your waiting for your approval and it’s even better not to apply when you do have approval. Only apply for credit after your mortgage transaction has closed.
Tip number five…Use more than 1 or 2 Credit Lines
Using 1 or 2 credit lines for everything is another red flag for lenders, even when just consolidating accounts. Credit scores are higher when the balances are spread to several different accounts. It’s also best not to pay the bill for 1 account with another account.
Pay Credit Bills Early
Another way to improve the chances of getting your mortgage application being approved is to pay all bills early, whether it’s a loan with a lender, credit card or utility bill. This is especially important to do if the balance is on the high side.
Don not Close Long-Standing Accounts
When a line of credit has been available for years, it’s best to leave that line of credit open, even if it is not being used. Closing an account like this will not remove a bad record anyway, as they are still listed with active lines of credit. Plus, accounts with good, long-standing credit improve credit scores and your chances of being approved for that mortgage.
The best way to improve a credit score is borrowing only what’s needed and repaying it on time. It may sound odd, but contacting the lender before paying a bill late helps. Hardship programs are usually available to reduce monthly payments.
Shop for Mortgages Quickly
Lenders request credit ratings when people apply for loans. When a credit rating is requested too many times, it can hurt the score because it indicates that money is attempting to be borrowed from several places. The best way to avoid this for is to finish shopping for a loan in about 30 days.
Have Persistence and Patience
To repair credit so you can buy a house can take time. By implementing these tips when there is it can take at least 6 months or longer. Remember, Credit scores are analyzed by lenders to determine if people are responsible and have the ability to repay the loan.