Today I want to talk about credit and a few things that you could do to absolutely destroy your chances at getting a home loan! Credit is a huge thing that underwriters look at and on your credit report. They look for things like:
· Your payment habits
· How have you been making your payments
· How much debt do you have
· What kind of debt do you have
A few ways to destroy your:
1. Don't make your payments on time. Making a minimum payment more than 30 days past the due date will lower your credit score.
2. Having a judgment, a lien, a foreclosure or a bankruptcy are known as "public records" and will significantly lower your credit score.
3. Having high balances on your credit cards. This can be interpreted as spending more money than what you're earning.
The general rule of thumb is whatever your credit limit on is on your credit card, you want to try and keep that balance to be at least 30% (or lower) of your credit limit. If your credit limit is $1,000, then you want to try and keep that balance under $300 dollars.
It's okay to keep the credit cards. You don’t have to close them out. In fact, if you have significant payment history on your credit cards, then closing those accounts could negatively impact your credit score!
What you want to do with those credit cards, no matter how much you spend, is make a payment every single month. The payment history that's associated with your credit cards or your installment loans (like an auto loan); is critical to earning a good credit score. Every time you make a monthly payment, it helps increase your credit score. The higher your credit score, the better interest rate options that you're going to have for your home loan or any type of loan that you apply for credit for.
I hope that helps! if you’ve got questions feel free to give me a call anytime or just go to TerryRoberts.com. Take care!
Terry Roberts, USMC Veteran Sr. Mortgage Broker NMLS 397987 www.TerryRoberts.com
E Mortgage Capital
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