For the best possible mortgage rate and products, you need to have an excellent credit score. To ensure you’re setting yourself up for success, there are a few key things to keep in mind:
Make Your Payments On Time
This might seem like a no brainer, but making your payments on time is very important to managing your credit score. When you borrow money from a lender, you agree to pay them back on a set schedule with interest until you have repaid, the debt in full. By doing this and not being late or under paying them, is one step in getting/ maintaining a great credit score.
If someone is delayed on a payment, this is a missed payment(s) and the lender reports it to the credit reporting agencies, which will impact your credit score. The more payments you miss, the greater in impact to your score. If 120 days goes by without payment, the lender will send the debt owed to a collection’s agency.
If you find yourself in this situation, communication helps. If you’re unable to make a payment, contact your lender and inform them of what is going on and your plan to get back to making regular payments.
Stop Obtaining New Credit
If you already have at least 2 lines of credit don’t obtain another one just for the sake of it; however, if there is a reason – such a vehicle loan, then go ahead and apply. Keep in mind that having more credit available to you doesn’t help your credit score.
Where this differs, is if your credit company offers you a credit increase, I would suggest taking it for the following reason. A credit card with a $10,000 limit is better for your credit than a credit card with a $2,000 limit because if you spend more than 2/3 of the available credit this can impact your score. If you are partway through your billing cycle and are pushing the 2/3 rule, I would suggest making a payment to bring down your balance.
Use You Card For Everyday Purchases
If you have a credit card, I suggest using it as a tool to build credit. Use your card for everyday purchases, gas, groceries, coffee, dinners out, etc. and then pay it off each month.
If you have any credit questions or are looking for mortgage solutions due to credit issues it would be a pleasure to speak with you.