Your Credit Score and how to improve it......

Look at your own finances first

Before purchasing a home or an investment property, no matter what the market looks like, take a look at your own financial situation. Be honest when looking at your assets and liabilities. Make a list of everything you owe and everything coming in and then balance the books.

 Check your Credit

To purchase a home, you will need to get a credit report check . This report will tell you, and a prospective lender, what sort of credit risk you represent. You are allowed a free credit check once a year at www.annualcreditreport.com

Your Credit Score, derived from your credit report, is the key factor in determining loan approval and the interest rate that lenders are prepared to offer you.  Credit scores range from 500 to 850 . The higher the score, the more options you will have when considering financing. It is important once you have your credit report to review it carefully and check for any errors or discrepancies. These may lower your credit score so make sure everything is correct before you begin the mortgage application process.

 Improve Your Credit Score

If you have a great credit score, congratulations! But maybe you’ve got the report and the score isn’t quite what you had hoped. Or maybe you just hadn’t realized what was on your credit report and you need to do some housekeeping. Here are some suggestions for improving your score.

Pay off old debts-

The amount of debt you owe is included in your credit report. Mortgage lenders want to make sure you will be able to afford your bills once you have taken on the additional debt of a mortgage. Old debts, tax bills, anything that shows as a liability needs to be taken care of before applying for a mortgage if you want to improve your credit score

 Pay your bills on time!

This seems obvious but sometimes things just slip through the net…. So tighten that net!!

Lenders will see your payment history on your credit report and they will check for patterns in your spending. An obvious red flag is making late payments- it is amazing how quickly this will lower your Credit Score and it takes about 6 months or more to build it back up again. If you find it difficult to remember when things are due, consider setting up automatic payments with your bank or post due dates in the family social calendar.  It’s worth staying on top of your due dates!!!

 Save More Money

It is recommended that when purchasing a home, first time buyers should have 3-6 months money stashed away. That’s not a bad idea for the rest of us either! Apart from closing costs and moving costs, there will be numerous unforeseen expenses and a loan officer will be pleased to see that your credit score is backed up with a little lump sum in the bank. It also underpins your position as a serious buyer which makes your offer more desirable.