No, I’m not giving personal fitness or styling tips this week. Instead, I’m going to share how to become incredibly attractive to mortgage lenders. And when lenders are attracted to you, you’ll literally save tens of thousands of dollars and have your pick of mortgage options that work best for YOU, instead of the other way around. It’s sort of like losing weight and wearing Italian bespoke shoes, but different.
Picking up from last week’s post, one of the reasons people rent for too long is because their credit scores are too low to qualify for a home loan. The sad part about this is that most credit can be repaired in six to twelve months, but renters either aren’t aware of how to fix it, or they procrastinate because they think it will take years to see any significant changes to their scores.
Do these four things, and you’ll be well on your way to being absolutely irresistible – at least on your mortgage application.
Don’t fall behind on existing accounts.
This includes your rent and car payments. One 30-day late ding can cost you anywhere from 30 to 80 points or more depending on the other factors being reported on your credit file.
Don’t close credit card accounts.
If you close a credit card account, it will appear to FICO that your debt ratio has gone up. It’s better to have a credit card with a $0 balance and a $5,000 limit than to eliminate that $5,000 available credit. Also, closing a card will affect other factors in the score such as length of credit history. Remember, 10 percent of your credit score is made up of your Mix of Credit, so it is important that you have at least 1 to 2 major credit cards open and in good standing.
Don’t max out or overcharge your credit accounts.
This is the fastest way to bring about an immediate drop of 50 to 100 points in your credit score. Try to keep your credit card balances below 30% of their available credit limit.
Don’t consolidate your debt onto one or two credit cards.
It seems like it would be the smart thing to do; however, when you consolidate all your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above.
Targeting a time frame to purchase a house is important, but the first step is to consult with a loan officer that can conduct an initial credit analysis for you. Fountain Mortgage has credit tools available for prospective buyers to help determine a specific course of action for credit score repair. The worst thing you can do is assume your credit is in too bad of shape to do anything about it quickly. You would be surprised at how quickly credit scores can bounce. Give Fountain Mortgage a call today to get started on your no-cost consultation. The best part? You don’t even have to diet or exercise to get in tip top credit shape.
This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268