Home Buyer Beware: Manage Your Credit Before it Manages
You
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Making an offer on the home you and your spouse
have dreamed about should be exciting but, in reality,
it can be one of the most stressful decisions for a
couple. Discussions about household finances and preparation
for major purchases can be particularly stressful. To
minimize stress, couples should take a comprehensive
look at their finances and how their credit histories
and scores impact purchasing power.
According to Robin Holland, senior
vice president of Consumer Services for Atlanta-based
Equifax, “Your credit history may have a serious
impact on mortgage rates; low scores can ultimately
cost home-buyers thousands of dollars over the lifetime
of their loan.”
When preparing to buy a home,
consumers should take a proactive approach to ensure
that their credit is in the best possible condition.
Consumers who do their credit homework will be well
positioned to secure the best loan rates available relative
to their situation. Plan ahead and don’t wait
until it’s time to make a major purchase -- now
is the time to get serious about your credit. Follow
these helpful steps to make sure your credit is in order
before you spot your dream home.
Five Tips for Managing Credit
Scores
Monitor your credit status. The
best time to work on your budget or credit score is
before you are ready to buy. Continual credit monitoring
will help you ensure that your information is accurate
by keeping you informed of any changes in your credit
file. Keep in mind that your credit score is based on
your history of borrowing and repaying money and changes
do not take effect immediately. Even if you have a good
score, proactively managing your credit is important
and may result in a better score in the future. A better
score can mean better rates and cost savings when you
borrow.
To help eliminate the guess work,
consider a tool such as Score Power (available at Equifax.com).
Score Power allows you to easily view your credit status
and understand how lenders view your credit. You can
also use Score Power’s Interactive Score Simulator
to show how your actions may impact your score in a
positive or negative way. ScorePower also provides a
list of specific tips on how to manage your score and
compares your score to the national average.
Don’t overdose on credit
cards. Avoid opening new credit cards that you don't
need just to increase your available credit. Applying
for multiple credit cards over a short period of time,
or for a card you're not likely to get could backfire
and actually lower your score. Apply for new credit
accounts only as needed.
Maintain the balancing act. Try
to keep your total account balances as low as possible.
High outstanding debt may negatively affect your score,
as you have a greater chance of missing payments.
Eliminate Errors. Correct any
inaccurate information that might appear on your credit
report.
Be on Time. Take special care
to make all of your payments on time. Always pay your
mortgage first. If forced to miss a payment, be sure
to pay your credit cards the following month. Accounts
that are more than 30 days past due will appear on your
credit report. If you have missed payments, get current
and stay current. The longer you pay your bills on time,
the better your score.
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