Interest rates are at historic lows making now a great time to take advantage of low real estate prices and low mortgage rates. If you’re looking to buy a house, it’s important to review your credit report now because mistakes are common. They could negatively affect your credit score and it could take several months to clear them up. The sooner you do this the easier it will be for you, knowing the information upfront.
1. There are a lot of free websites you can go to and request your credit report to review. You can also contact a mortgage broker and have them pull your credit report and go over it with you. They can easily tell you the most beneficial things you can do to increase your credit score the quickest. It’s common to see old debts that are still showing up on your report, even though you have paid them off. Get them removed!
2. Use credit regularly, making sure you always pay your bills by the due date. You are trying to show that you are responsible and can manage and repay debt. Showing this track record will help increase your score.
3. Having available credit will increase your score. You want to have high lines of open credit, but not max them out. For example, you have a $10,000 limit on a credit card, but you only use $1,000 a month.
4. Pay down some debt if possible. Your goal is a 36% debt-to-income ratio. If you go above that ratio it will become difficult to get a mortgage.
5. Don’t be so quick to close out accounts. If you have open lines of credit and then close them, it makes you look like you are closer to being maxed out. It’s even a good idea to consider balance transfers to spread out your debt more evenly, from one line of credit to the other. If you can keep your debt at about 20% – 30% of the available credit line, that is ideal.
Your credit score is more important now than ever. Take some time to invest in yourself and work to bring your score up to high levels. The higher the score, the better interest rates you’ll get and the easier it will be for you to get a loan. Having cash is very important, but a lot of people would argue that credit is even more important. If you’d like a recommendation of a good mortgage broker, please let me know.
Gabe Mellein was voted a Top Real Estate Agent – Exceptional in Service and Overall Satisfaction by Gulfshore Life Magazine in 2012. He is the broker of Gulf Pointe Properties, Inc and has over 9 years experience in the SW Florida Real Estate Market. He is a member of The Naples Area Board of Realtors, Bonita Springs – Estero Association of Realtors, Realtor Association of Greater Fort Myers and the Beach, The Florida Association of Realtors, The National Association of Realtors, and is nationally certified in Feng Shui for Real Estate. Need real estate help? Please contact Gabe at: 239.825.2234, Gabe@GulfPointeProperties.com or www.GulfPointeProperties.com