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Maintain Your Credit When Obtaining a Home Loan

November 10, 2016 by · Leave a Comment 

Thinking about buying soon? Make sure your credit is in order

Doing a few things to maintain your credit score can make a big impact on long term savings.

 

 

 

 

 

 

 

 

 

Looking at new homes for sale in Pawleys Island?  There’s no more important time to work on your credit score than when you’re about to apply for a mortgage. Improving your credit can save you a ton of money—we’re talking about thousands of dollars over the life of the loan. Here are the actions you can take that will have a notable impact on your score. Here are some helpful hints from Pawleys Island Real Estate.

Pay down your credit card balances Credit utilization is one of the biggest factors in determining your credit score. Your credit utilization should at least be less than 30 percent of your limit, and it’s even better if you can get it below 15 percent. This rule applies to both individual cards and your overall credit limit.

It may even be worthwhile to use some of the cash funds you were planning to use for a down payment to pay off credit card balances.

 

This credit pie chart takes an in depth look at what comprises your credit report.

 

 

 

 

 

 

 

 

 

 

 

 

Do no harm While you certainly want to improve your score if possible, at the very least you’ll want to keep it steady. Avoid opening new lines of credit if you’re applying for a mortgage in the very near future. This will cause a hard inquiry to show up on your credit report.

Take care of negative items It’s good practice to check your credit report for negative items a few times a year—you can get one free report from each of the three major bureaus (Experian, Equifax, and TransUnion) per year.

 

Many major credit card companies and banks now offer a free credit report attached to your account. Take advantage and dispute any negative items that seem unfamiliar.

 

 

 

 

 

 

 

 

 

 

If you find any negative items (collections, late payments, etc.), write a letter to the original creditor. Explain the circumstances that led to the negative item, and request that it be removed from your report. It can be surprisingly effective, and removing a negative item will improve your credit score in a hurry. You can find some good templates for a request letter online.

 

Melissa Keller, Real Estate Agent in Pawleys Island

 

 

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