Credit Center

Before you purchase a home you need to get your finances in order. You need to have good credit before you fill out your loan application to secure the mortgage to purchase your home.

The first thing that you need to do is put together a spreadsheet of all your debts and liabilities; this includes car loans, student loans, and credit card debts. You need to get a picture of your current financial status because your amount of debt does impact your credit.

The second thing that you need to do is put together a household budget; a budget is a great way to assess what type of mortgage payment you could afford. You do not want to get in over your head when you purchase a home. It is best to under budget and get a lower monthly mortgage payment just to be on the cautious side.

The third thing that you need to do is reduce your overall debt. You should try to get all of your credit cards to a point where you have only charged less than half of the total credit line available. Banks frown on applicants that have too many maxed out credit cards because it makes you look charge happy and irresponsible.

The fourth thing that you need to do is try to reduce your fixed expenses. You should trim your budget and see where you can save money. You can reduce your cable coverage, stop going out to eat, look for a lower insurance rate, etc.

The fifth thing that you need to do is start putting aside money for your down payment. You want to show the bank that you are serious about purchasing a home and saving money can be very beneficial to the cause.

The sixth thing that you need to do is to check your credit report; many people have items on their credit reports that they do not know about. It is important to evaluate your credit report and see if there are any items that need to be disputed. If there are, then file a dispute with your credit reporting agency.

The seventh thing that you need to do is avoid charging your credit cards; credit cards charge interest and can dig you into a deep financial hole. While you are trying to get your finances in order just rely on cash or your debit card to make all of your purchases.

The eighth thing that you need to do is to pay all of your bills on time especially your credit card, student loan, and car payments on time. These payments are listed on your credit report and missing more than one payment will add something negative to your credit report.

The ninth thing that you need to do is make sure that you do not have any accounts that have been sent to a debt collector. An account in debt collection will sink your credit score very fast so pay off any accounts if they have been sent to a debt collector or are in danger of being sent to one.

The tenth thing to do is to establish financial goals for yourself; try to set target saving goals so that you are motivated to save money. Splurging and not being thrifty with money will never get you that dream home so sacrificing a little and working very hard can pay off in the long run.

Hopefully these tips will help you get your finances in order so that you can better your credit rating and secure a mortgage. Buying a home is such a special event and everyone should have a place that they can call their own.

During these tough economic conditions many people are struggling to maintain their current credit score. This is what banks and other financial institutions look at when they are evaluating you and will play a major role in determining if you will qualify for the exact home mortgage that you are looking for. In most cases many people may know what their credit score is but do not know how to be able to raise it. To be able to do this requires that you use certain strategies that have been proven to increase your overall credit score such as:

Pay your bills on time: This might sound like such an obvious thing but the reality is that at some point all of us are late in paying our bills at one time or another. Just having one late payment on a bill can have a major effect in determining what your credit score is. For example let’s say you have a good credit score of 700, however, you were out of town on business for three weeks and you were late paying your bills when you returned. Just being a little late on one bill can affect your overall credit score by 100 points, which is a huge amount. Sometimes things come up and you may be running a little late on your bills, however, you want to make a constant effort to always try to pay all of them on time that way this kind of situation doesn’t happen to you.

Pay down your debt: There are many people who struggling beneath a mountain of debt from credit cards, their mortgage and their car loans. To improve your overall credit score requires that you pay down the debt that you have. What you want to do is consolidate your debt down to one low monthly payment. Over a period of time the overall level of debt that you have will fall and the amount of interest that you are paying will drop dramatically saving you thousands of dollars a year. The fastest and most effective way to raise your score is to pay down your credit card debt. This carries the highest amounts of interest and fees, by simply reducing the amount that you owe will cause your credit score to rise very quickly.

Always monitor your credit report: There are many instances where some people don’t know what their credit score is much less what is on their credit report. To be able to improve your credit score requires that you know what is on it so you can see what factors are causing it to drop. Once you know this then you have a starting point as to how to improve it. There could also be errors on your report. If this is the case you can dispute the error and be able to have it removed improving your credit score quickly. What you want to do is monitor your credit report with all three major credit bureaus every three months. You can go to many different web sites that will let you print out your credit report for free. This help you to always know what is on your credit report that way you can keep your score at the highest level possible.

There are many different proven techniques that can help you improve your credit score such as: paying your bills on time, paying down your debt and monitoring your credit report. All three will help improve your credit score over time. However, to make any improvements last requires that you always work to maintain the highest score possible at all times.

The interest rates for a car loan can vary based on your credit score, the higher the score the less interest you will pay on that loan, the same is true for a house. 

Credit scores are not fixed in stone and you can repair your credit.  Improve your available credit and your chances of securing a loan improve your credit score. 

Every month when you pay your bills on time you build up good credit by making your credit score higher.

Thinking of buying a house then first start with looking at your credit report and repairing it if necessary.  This will save you some frustration down the road and time when you find that house you want to call home and then your credit score is too low to let you buy it in Lexington.

These agencies offer free credit reports up to a certain point and they are available to explain their reports.

Credit Bureaus

Equifax – http://www.equifax.com/
To order your report, call: 800-685-1111 or write:
P.O. Box 740241, Atlanta, GA 30374-0241
To report fraud, call: 800-525-6285

Experian – http://www.experian.com/
To order your report, call: 888-397-3742 or write:
P.O. Box 2104, Allen, TX 75013
To report fraud, call: 888-397-3742

TransUnion – http://www.transunion.com/
To order your report, call: 800-916-8800 or write:
P.O. Box 1000, Chester, PA 19022
To report fraud, call: 800-680-7289

The values of the scores are:
 
Credit Scoring Scale
Score Grade Credit Outlook
901-990 A    Excellent Rating
801-900 B    Good Rating but short of being Excellent
701-800 C    Fair; Moderate Risk
601-700 D    Higher Risk
501-600 F     Highest Risk
 
Just remember that good credit is one of the most important things to have when purchasing a home. Try to keep your credit good by paying your bills on time.

A credit report is an accumulation of information dealing with how well people pay their bills and repays loans, how much credit you have available, what your monthly debts are, and other types of information that can help a potential lender decide whether you are a good credit risk or a bad credit risk. This is a very important document that helps the lender decide to loan a borrower money or not, your credit worthiness.

Credit bureaus, also known as credit reporting agencies (CRAs), collect information from merchants, lenders, landlords, etc., and then sell the report to businesses so they can evaluate an application for credit. Lenders make their decisions based on different criteria, so having all of the information helps in this process.