10 tips to improving your credit

Credit scores, credit history, along with your overall income and debt, are a big factor in determining if you'll qualify for a loan and what loan terms you'll be able to qualify for.

1.)  Get a copy of your credit report and scores from all three credit bureaus.  Equifax, Transunion, and Experian.  Look it over.  Check for and correct errors in your credit report. If there is a mistake, correcting it could raise your credit score tips. 

2.)  Pay off small collections or arrange for payment plans.  Try to have them all paid off at least 6 months before you buy a Michigan home.

3.)  Pay down credit card bills and lower your payments.  By having lower balances will raise your score.  Lowering your payment will improve your debt ratio and  will allow you to qualify for a bigger house payment.   If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.

4.)  Don't charge your credit cards to the maximum limit.

5.)  Wait 12 months after credit difficulties to apply for a mortgage. Ifyou have had late payments it is best to wait a year.  A year of clean history will raise your score and get you a lower interest rate.  You're penalized less for problems after a year.   If you have had a foreclosure or bankruptcy it may be better to wait even longer.  Email me to go over your credit report.

6.)  Don't purchase big-ticket items for your new home on credit cards until after the loan is closed and you are in the new home. The amounts will add to your debt and may disqualify you for the home.

7.)  Don't open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.   So don't buy a new car, new furniture until after you buy the house. 

8.)  Don't change jobs, or make major changes when applying for a home loan unless absolutely necessary.  No new credit

9.)  Shop for mortgage rates all at once. Do not have your credit pulled more than 3 times.  It will lower your score.  Get a copy of your credit report and tell the lenders your scores.  Or show them the report.  Too many credit applications can lower your score.  They say multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time, but many times it lowers the score.

10.)  Avoid credit repair and credit counseling companies. It is a negative.  Lenders feel if you can't manage your money now why would they loan you more.  Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

Whether you buy a Wayne county home, a Livingston county home, a Washtenaw county home, an Oakland county home it is all the same.  By having a good or great credit score will save you money by getting you a better interest rate and lower payment. 

                                                                                    Russ Ravary