Credit Basics
Credit scores are updated every 30 days with the three credit bureaus (Equifax, Transunion and Experian). Each lender uses a different scoring model to determine your worthiness for loan approval; however, there are some things you can do to improve your scores across the board.
CREDIT MATTERS
Remember that no credit does not equal good credit. Lenders are looking for borrowers who are experienced with utilizing and managing credit. They want to see how responsible you've been while actually using your credit. That's why you should have at least 1-2 credit cards, use them frequently, and pay off the balance every month. Having a mix of credit types - for example, a car payment, installment loan, and even a department store card - can help as well. Each credit type carries a different weight in determining your credit score.
KEEP YOUR BALANCES LOW
Make sure you're utilizing no more than 30% of your available credit limit on each credit card at any given time. In other words, your balance should never exceed 30% of your limit. Anything more will start to negatively affect your credit score.
KEEP YOUR CARDS OPEN
Having available credit is so important in maintaining a good credit score. That's why, when you pay off a balance, you should never close the account! This erases all of your good payment history and lowers your total available credit (which drives up your overall utilization). Also, the length of your credit history matters, and the credit accounts with the longest history have the most impact on your score. Leave your credit cards open and use them from time to time, but definitely don't close them!
BONUS CREDIT HACK: CALL A FRIEND
If you need more credit quickly (a longer history, a greater amount of available credit, and/or more reliable payments), consider asking someone you trust to add you to one of their credit accounts as an authorized user. You can immediately - as in within 30 days - begin to benefit from that person's on-time payments and high credit limit.
Finally, if you know you're experiencing credit issues and really want to purchase a home, don't just bury your head in the sand because you think you can't qualify! Most credit can be repaired to lenders' standards within 30 to 90 days. For more information on getting qualified to buy, and to be connected with our trusted lenders, simply contact us!
“Jennifer was extremely helpful in helping me purchase my first home. She was patient and knowledgeable with all my questions, and made sure to take my requirements into consideration during every house showing. I would definitely recommend her to anyone looking to purchase a home!”
