Improving
Your Credit
Credit
scores, 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. Check for and correct errors in your credit
report. Mistakes happen, and you could be paying
for someone else’s poor financial management.
2. Pay down credit card bills. If possible,
pay off the entire balance every month. However, transferring credit card debt from one card to
another could lower your score.
3. Don’t charge your credit cards to the
maximum limit.
4. Wait 12 months after credit difficulties to
apply for a mortgage. You’re penalized less for
problems after a year.
5. Don’t purchase big-ticket items for your
new home on credit cards until after the loan is
approved. The amounts will add to your debt.
6. Don’t open new credit card accounts
before applying for a mortgage. Having too much
available credit can lower your score.
7. Shop for mortgage rates all at once. Too
many credit applications can lower your score, but
multiple inquiries from the same type of lender
are counted as one inquiry if submitted over a
short period of time.
8. Avoid finance companies. Even if you pay
the loan on time, the interest is high and it will
probably be considered a sign of poor credit
management.
This
information is copyrighted by the Fannie Mae
Foundation and is used with permission of the
Fannie Mae Foundation. To obtain a complete copy
of the publication, “Knowing and Understanding
Your Credit,” visit http://www.homebuyingguide.org. |
