If you plan on purchasing a large ticket item like a new vehicle, land, or house, it is good to know your credit score ahead of time. But where you get those credit scores from can make a huge difference to lenders. So if you are planning on buying a home, stick with proven basics.
(1) Check with whichever lender / loan officer you have chosen to work with first. They know which scores they will use, and they know how they can help improve your score if need be.
(2) Plan ahead, especially if you think your score is borderline. It can take 2-4 months for your score to show improvement.
(3) Get in the habit of monitoring your score, but again, ask your loan officer first.
(4) Whatever payments you currently have, make sure to pay them on time. If you have to, set up automatic payments with your bank, and follow that up by checking you account online to make sure the payment shows in your account.
(5) You can also call and make payments over the phone, but mark your calender ahead of time to remind you when payments are due. Don't assume a grace period will stop some companies from marking your payment as late.
(6) Don't open new store accounts just to get a 15% discount on your purchase.
(7) If you have established credit card accounts, monitor the available credit. Never use over 50% of available credit unless you have some real emergency. If you have a $5000.00 credit limit, try to only use $2000.00 of that. Using only $1500.00 of the $5000.00 is even better.
(8) Just as important as credit score is your debt to income ratio. Discuss that with your loan officer, and make sure you have a clear understanding of it.
Remember that some loan programs require you to have at least 2 months of payments in reserve. It could be even more. Discuss this with your loan officer. A savings account may be in order.
Don't watch your home buying plans go up in flames because you didn't plan ahead and follow the basics.
Jeff Pearl | Lic in VA
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