1. Pay on Time
It is an important factor to a potential lender whether or not you will pay your bills in full and on time.
2. Use a Variety of Credit
A variety of credit, such as mortgage loans and credit cards, can show that you are responsible for paying back both large and small financial promises.
3. Keep Accounts Open
The longer your credit history, the higher your credit rating tends to be. Opening a credit card account just to take advantage of a discount or a freebie then closing it right away works adversely. Better to keep it open.
4. Check all the factors that affect your personal credit score. Your report will show details like accounts with late payments, the various types of credit you’ve used, current balances and payment histories, public filings, and credit inquiries. You will also have the opportunity to correct negative or wrong information on your file. You have the right to a free credit report every year from the three credit reporting agencies listed below. Please note that your free credit report while providing all information in your history, does not provide a credit score. You could, however, pay for this at these bureaus or request a tri-merge with your Mortgage Express Loan Officers. For Mortgage Express to provide you a tri-merge, we first need your signed authorization and then your payment for the exact charge amount by the credit reporting company which is normally $15.25 per a single person or $20.83 for a couple.
5. 3 Credit Report Bureaus
A) Transunion – P.O. Box 4000, Chester, PA 19022, phone: 866-887-2673,
Website: www.transunion.com
B) Equifax – P.O. Box 740241, Atlanta, GA 30374-0241, phone: 800-685-1111,
Website: www.equifax.com
C) Experian – P.O. Box 2002, Allen, TX 75013, phone: 888-397-3742,
Website: www.experian.com
6. EXAMPLE ONLY – Higher credit scores tend to give you a better interest rate.
Differences NEEDS WORK and VERY GOOD
Fico Scores 520 720
Interest Rates 9% 5.5%
Payments $2522.56 $1703.37 = $710.50 Monthly Savings
Mortgage $300,000
Many Loans are fico driven, meaning the lower your score the higher your interest rate.
7. Setup Automatic Payments – On your Mortgage, Car Loan, and other regular installments. Setting up automatic payment systems could benefit you to ensure payments are made on time.
8. Prepare a:
Balance Sheet (Assets – liability = net worth) or
Income Statement or
Letter that states your net worth
Expenses vs. Income = Discretionary Income at the end of each month
9. Savings, CD, IRA, Retirement Accounts - It will reflect on you as a stronger borrower.
10. Secured Credit Cards, Secured Line of Credit – By securing a line of credit or credit card you would need to personally deposit your own funds into a secured account.
11. Credit Cards – Keep your credit balance limit at a minimum of 35% and lower.
Example: $1000 @ 35% = $350
12. Keep at least 2 – 3 Trade lines Open
Other helpful tips:
Piggybacks – Ask a parent or a family member or a close trusted friend with an excellent credit history if they are willing to help you out by adding your name on their account that way their good credit will reflect on yours as well.
Pay off all your smaller bills and high interest debts first then your larger ones.
Loan Inquiries – Don’t apply for too many loans or credit cards in a short period of time. It will affect your credit report and show as an inquiry which may make a lender suspect that there are more new accounts and additional debts.
Vehicle, Big Screen Television – Don’t make a purchase if you are seriously thinking of purchasing a home in the near future. In fact once you are in the loan process, you should not be making any large purchases unless it will not affect your qualifying. |
