One of the first stops on the road to home ownership is figuring out your finances, and that includes understanding your credit, a critical piece of the buying puzzle.
According to Paul Stevens, CEO of Just Property, good credit often opens the door to success when it comes to buying a home, and, unfortunately, bad credit can close it. Whether your credit is in need of an overhaul or you’re looking to preserve your stellar score, now is the time to address your creditworthiness so you can position yourself to get the best mortgage at the best rate. Just Property has provided 8 steps to help you solidify your credit score.
1. Get a Copy of Your Credit Report – If you don’t have a current one, get your credit report now. You need to be aware that problems exist before you can solve them. Serious issues, and sometimes even minor ones, can take months to repair. There are a variety of ways to get your report, and you’re entitled to a free one from each of the credit bureaus once a year.
2. Mistakes Happen – Get Them Fixed – Every year, a whopping 25% of people who get declined for a mortgage had errors in their credit report. When you spot them, it’s up to you to fix them. Your report should have step-by-step have instructions on how to complete the credit form. Follow them to a T, and keep a good record of your dispute, including copies of any documents you file with the bureau. Once you make an initial claim, you should get a response within thirty to sixty days.
3. Stay Current – Pay your bills on time – It sounds obvious, but if you’re looking to increase those scores over time in a clear and steady upward climb, never miss a payment. Ever!
4. Pay Over The Bottom Line – Another credit building tip is to always make more than the minimum payments on your revolving credits each month. A history of minimum-only payments is not a positive indicator for anyone reviewing your credit report. Always pay more – even if it’s just a little bit. Not only will you be chipping away at your balances faster, but you’ll save money on the total amount of interest handed over to your bank.
5. Maintain Low Balances – Some say the best way to keep you score afloat is to avoid carrying a balance that’s over 50% of your limit on each card, so pay those debts down below that halfway mark as soon as possible.
6. Don’t Move It, Lose It – It is important to pay off the debt on your existing credit card, instead of simply moving it to another card. The credit card companies have caught on to consumers who try to reduce balances by shifting them back and forth between cards, and while they’ll still let you do it, they’ll charge you a large fee. Incurring the extra cost is simply not worth the benefit. You’ll pay off debt quicker (and you’ll have less of it) if you just work hard to pay off what’s on the card you already have.
7. Buying A Car Can Put A Dent In Your Credit Score – It’s best to avoid any big changes your finances right before a home purchase. That means no big purchases on credit, like buying a car or charging an expensive vacation. Any significant buys can alter your financial picture, and banks don’t like to see sudden changes just before approving a loan.
8. Plan Ahead – If you think you can get your credit spruced up and ready to go in a matter of days, think again. Even without any dings on your report, you’ll want to make sure all your credit cards are paid up prior to qualifying for a loan, and that requires planning. Get ahead of the game by paying down your debt, then try and lock up your credit cards until your credit score has been checked and you have been approved for your mortgage.
Just Property understands that nothing is more central to your happiness than the spaces in which you live, work and play. By combining their knowledge, talent and passion for property, they aim to become the largest property service organisation in Southern Africa. Just Property are focused on discovering new and unexpected opportunities that open doors for their clients and all prospective home owners.
29th April 2016