Please wait as we prepare your PDF file ....

Mission Chronicle Blog

Search Blog

our goal is to help you stay informed by providing timely and interesting articles.

9 ways homebuyers can improve their credit scores

08/16/2017

Download PDF

The real estate business is booming, and with a scarce supply of starter homes on the market, competition between buyers is fierce. To get loans quickly, potential homebuyers need to keep an eye on their finances and credit.

Below, you will find nine general tips that will help ease the process of acquiring a home loan by improving credit scores.

1. Always pay on time

No lender likes to lend money to an individual who has a repeated record of missing his payments. This indicates a lack of discipline and poor financial management, and it leads to a bad impression on paper.

Whether it was intentional or due to genuine reasons is immaterial. If you have a frequent history of missing your equated monthly installment (EMI), you will end up with a lower FICO score. Why should you suffer unnecessary late payment charges and interest? Instead, pay in full and on time.

On-time payments improve your credit score tremendously, carrying almost a 40 percent weight on your score.

6 ways empowered agents embrace disruption to drive success Using technology to generate leads and win listings READ MORE

2. Keep your credit owed within limits

A good ratio is not having your unsecured credit outstanding above 50 percent of your annual salary. Keep your credit card balances within half of the allowed limit. If you have $10,000 as your limit, then it is wise to restrict your statement amount to $5,000.

3. Use two credit cards if you are a definite credit card spender

This is good and bad advice at the same time. FICO does not consider spending money on two credit cards as one. But if you have two credit cards, you can keep your usage percentage in control.

For example, if you have a credit card with a limit of $20,000, and you charge $15,000 on it, you’ve used 75 percent of your credit limit.

Now if you split your amount into two, and spend $7,500 each, then the percentage of usage will be around 37 percent. So it helps you in the eyes of FICO.

Now, don’t go on a credit card shopping spree.

4. Maintain a good mix of good and bad loans — AKA, a healthy credit mix

Home loans and business loans are considered good loans. Personal loans and credit are considered bad loans.

That is why investing in a home loan if you are a spendthrift is a better decision. You will have a good credit mix and be building an asset.

5. Pay high-interest loans and small loans first

It is a prudent decision to pay your home loans over longer periods. Pay off your personal loans, credit cards and private loans first, as they tend to have a higher interest rate with no asset creation.

Home loans, on the other hand, are lower (and right now, hovering at historic lows) and they also build an asset. This is one of the underutilized logical tips to improve your credit score.

6. Close your unwanted savings accounts

Many people tend to abandon their savings accounts without closing them. If you have less than your Minimum Average Balance (MAB), it will start to affect your credit score. Also, when you finish a loan, it’s imperative to get the loan closure certificate.

7. Check your credit reports regularly

Credit reports can be availed for a minimal cost. You can obtain them from the official FICO site. Just pay online and check your credit score at least once a year, so that you can seek clarification on any mistake and have it sorted. There have been cases when banks report you to FICO by mistake.

8. Monitor your co-signed joint accounts properly

In instances of co-signing a loan or maintaining a joint credit account, be careful when dealing with someone outside your close family. You need to monitor the statements closely to make sure everything is in order.

There is no use complaining if you chose the wrong joint holder who was careless.

9. Negotiate if you cannot pay on time

This is also one of best tips to improve your credit score. People often know that they won’t be able to pay their bills in advance. Regardless, they do not take any action.

If you know that you will not be able to pay on time, negotiate with your bank. Banks will be willing to extend your loan period and reduce the EMI if they see a genuine customer.

It might hurt, but you will make a good impression, and the bank will see you are honest.

These are some of the tips to keep your credit score in check and get a home loan easily.

Editor’s note: An earlier version of this article originally appeared on Inman in 2016. It has been refreshed and reposted. 

Johnson Fedrick is the PR and marketing head at High Life With Mona. Follow High Life With Mona on Facebook or connect with it on LinkedIn.

Email Johnson Fredrick.

Source: click here

Read More

INSPIRED, INTELLIGENT, INSIGHTFULL

STAY INFORMED WITH TIMELY AND INTERESTING ARTICLES FROM OUR BLOG, MISSION CHRONICLE. OUR ASPIRATION IS TO PROVIDE REALTORS AND OTHER REAL ESTATE INDUSTRY PROFESSIONALS WITH EXCEPTIONAL RESOURCES AND SHARE OUR KNOWLEDGE TO PROPEL YOU TO YOUR GOALS.

  • How urban buyers are creating space and redefining how they live

    We’ve all experienced the shift this year: luxury buyers opting for spacious homes in the suburbs ...

  • Realable puts a unique spin on virtual tours

    Have suggestions for products that you’d like to see reviewed by our real estate technology ex...

  • Navigating the long-term decentralizing of work (part 2 of 2)

    As interest in urban condos fluctuates and suburban mansions see multiple offers, the shift to decen...

  • Growth-oriented Keap hits most of the CRM high notes

    Have suggestions for products that you’d like to see reviewed by our real estate technology ex...

  • What the decentralizing of work means for your market (part 1 of 2)

    Successful professionals in business and finance are some of the leading buyers and sellers of luxur...

  • Part Instagram, part Pinterest, property search gets social with Rila

    Have suggestions for products that you’d like to see reviewed by our real estate technology ex...

  • Where do buyers want to retreat to this year?

    For luxury real estate buyers, the search has begun for homes where the nearest neighbors are large ...

  • Manage leads, listings and loans with Townify

    Have suggestions for products that you’d like to see reviewed by our real estate technology ex...

  • 3 trending outdoor amenities buyers are looking for

    Easy access to the conveniences consumers once enjoyed outside their homes — from spas to gyms to ...

  • OpenFrame brings new twists to its virtual home tour app

    Have suggestions for products that you’d like to see reviewed by our real estate technology ex...

October 2020
Mon Tue Wed Thu Fri Sat Sun
 1234
567891011
12131415161718
19202122232425
262728293031  

  • Polls

    What information you are looking for?

    View Results

    Loading ... Loading ...
  • Last month Results

    How Is My Site?

    • Good (100%, 3 Votes)
    • Excellent (0%, 0 Votes)
    • Bad (0%, 0 Votes)
    • Can Be Improved (0%, 0 Votes)
    • No Comments (0%, 0 Votes)

    Total Voters: 3

    Vote

    Loading ... Loading ...