Improve your credit score for homebuying
Looking to buy a home soon, or just want to be sure you’re mindful of a good credit score, Holly Henbest has the top six tips to make you look good on paper!
- Revolving Credit
- Your credit score is impacted most significantly if you keep your balance at two different tier levels – the two are:
- 50 percent or less of the limit or
- 30 percent or less of the limit
- So, if you have a credit card with a $10,000 limit, keep your balance at under $5,000 or even better under $3,000.
- You would be better to have three credit cards with a total limit of $30,000 and a total balance of $9,000, then one credit card with a limit of $10,000 and a balance of $9,000.
- Authorized User Status
- Did you get included on a family members credit card for convenience? Get yourself removed. Call the credit card company and ask to get yourself removed and ask to have them send you a letter to confirm you’ve been removed.
- Checking your Credit
- Don’t get your credit pulled to check things on a frequent basis.
- It’s good to be aware, but the more you have your credit pulled, it can hurt your score.
- Paying Off/Closing Credit Cards
- We hear it all the time and its true, don’t close your credit card account.
- You may get excited when you pay it off and just want it gone, but don’t close it.
- Instead just shred your card and don’t use it.
- Have a collection?
- Contact a Mortgage Banker and they can coach you on getting this removed.
- Remember, once you pay a collection, you have no negotiation power.
- Ideally you want the collection removed. Getting it paid doesn’t really help your score. You need it removed to help your score.
- Use a credit simulator.
- Some Mortgage Bankers have a credit simulator and they can plug in scenarios of if you pay down a credit card, how much will your score go up.
- So, before you decide who and how much to pay, have the Mortgage Banker check it out on the Simulator.