Whether you’re looking to buy a home or rent your credit history will have an impact on your plans securing the home of your dreams. We all hope for good news when we are having our credit run, but sometimes we find we are greeted not with the best news. Credit scores along with your overall income and debt are big factors in determining whether you’ll qualify for that loan and what the terms will be. If you’re looking at renting an apartment and think your credit isn’t going to play a role your wrong. Often times owners will look at a credit score and it plays a huge factor not only when negating rent and terms, but can mean the difference if you’re told you’re accepted or not. There are things you can do.
Check your credit score. Did you know your allowed up to three credit reports from
Equifax: 800-685-1111 (general) or 800-525-6285 (fraud); P.O. Box 740241, Atlanta, GA 30374; www.equifax.com
Experian: 888-397-3742 (general and fraud); PO Box 2002, Allen, TX 75013, www.experian.com.
TransUnion: 800-888-4213 (general) or 800-680-7289 (fraud); P.O. Box 2000, Chester, PA 19022; www.transunion.com.
MyFico.com shows seven years of credit history and the credit info that it displays is the same credit information that the banks use.
There are also sites you can go to online that allow you to access all three on one website if you don’t want to go to each one. You are allowed a free credit report once a year from each credit bureau.
- Manage those credit card bills. If possible pay off entire balances every month. Try to minimize transfer debt to another card you could lower your score.
- Don’t max your cards out.
- Don’t close out all your credit cards. I will never forget a client of mine was telling me they did the responsible thing and closed on their cards they hadn’t used in two years, and when I had to run there credit for there dream apartment I found out they had an issue with credit. The client was shocked to hear this news. When you close cards out your cutting off that line of credit and if you have several cards you closed in one day guess what that might negatively have an impact on your score.
- Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
- Just because you found the dream home and you have a pre-approval letter your mortgage broker will hopefully tell you this don’t make any large purchases ideally till you close at the very least wait till your approved for the loan. Make those big purchases like a new car, stuff for the new home after you closed on the home. When in doubt check with your mortgage broker if that buy will hurt you in the end.
- Don’t open new credit cards before you apply for a mortgage. Too much available credit can lower your score
- Shop around for mortgage rates all at once avoid having too many credit applications which can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short time.
- When applying for an apartment when renting apply for one apartment at a time and only submit an application on places you love if you have doubts don’t submit an application. When that real estate agent or private landlord runs your credit they will see all the parties that have inquired on your credit history and that might be a red flag for that owner. Your score will also be lower then it was if you only had someone inquire once. You want to give a good first impression to the landlord or real estate running your credit.
- If you have flaws on your credit history don’t try to hide it by saying anything. Make it known in the beginning so hopefully that mortgage broker or agent can think of ways to help you secure that loan or property. If your working on improving your credit history make sure you document it. Get statements from your creditors stating you have worked out a payment plan to repay your errors of the past or that the matter has been cleared up is just as important has starting to address the problem.
- Disclosing potential roadblocks will not only max your time but other folks involved trying to make your new home a reality.
If you have questions about this blog or have questions about entering the buying or rental market please contact me anytime.
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