Do you have an Ugly Credit Score? Tips on How to Improve Your Score before Buying Your Virginia Beach Home
An UGLY credit score sometimes happens before a real estate transaction. You just need to be prepared ahead of time and fix it before buying a home
in Virginia Beach or Hampton Roads.
When I prepared
for my Virginia Beach home purchase many years ago it was UGLY. 700 credit score? Get real, not even close!!! I was so dumb about the credit scoring process.
If there was a 0% interest rate credit card available I owned it. I swapped balances on credit cards as fast as they hit the mailbox. American Express, VISA,
Master Card, they all loved me!!
Pay attention - maintaining and improving your credit score is an enduring process. It requires constant vigilance
against mistakes being entered by credit bureaus and the worst case - potential identity theft. Just how stupid was I? The effect on my credit score by swapping cards was lowering. Really, I quickly
learned what to do over the next year to fix it and join
the 700 club.
In
our last post we discussed how a good and great credit score (FICO) plays an
important role in obtaining the best real estate mortgage interest rate and
terms for your Virginia Beach home or condo.
What is a good credit score?
Generally, 700 or better is very good and will ensure you get a good
interest rate and terms for your home mortgage.
Rates
are at historical lows with good credit scores. There
are still very good home mortgage programs for scores under 700 so do not be
discouraged if you are not quite there yet. Truthfully, approximately 50% of the population has a score below 700. Read
more about financing here.
Anyone can raise their score!!
So if your credit
score is UGLY, let's talk about how it can be fixed before you apply for a
home mortgage. If you do not get a
mortgage this self improvement will save you hundreds of dollars with excellent credit in the
future.
Important things
(Read twice):
- Always, always,
pay bills on time. Late payments
drive down your score.
-
If you are past due on bills, get up to date and remain
current. Creditors are not sympathetic people. They
are really UGLY.
-
Keep debts to minimum levels. High credit card balances push your score
lower. Some experts say to stay below
50% of available credit. A better target
is 30% of available credit.
-
Pay off debt - the American dream. If you are considering buying a Virginia Beach home in
the next year eliminate debt. Sell your
car, boat, RV, or whatever, to get rid of the payment counting against your score. Drive an UGLY clunker for awhile. That few hundreds of dollars savings will reduce your debt to income ratio (important for home mortgages) and will help you
buy the dream home.
-
Do not close accounts after paying them off or down. This will hurt your credit score. Keep them open but no charging!!
-
Get rid of UGLY installment loans. Some installment loans like the "no interest
or payments for two years" will kill you on credit scoring.
-
A variety of credit sources can help your score, but must be
managed correctly.
Address credit report errors with reporting agencies
directly and not through a scam company.
Most of the credit reporting agencies let you do this online. In some
cases, if they do not get answers from the creditor reporting the debt it may
be eliminated from your credit report.
Sometimes with extenuating circumstances they will dismiss the "mark"
counting against you. (divorce, transfer, many years ago and good payment history
since debt, etc.). Addressing credit report issues is FREE and no harm in asking.
Hang in there - Time will cure the
UGLY credit score and fortunately for you not require surgery.
If you follow
the above guidelines your credit report and FICO score will improve. Mine did. Now, enjoy your new affordable dream
home.
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