Simple Ways to Help Maintain Your Credit Score
It is exciting to shop for and find your dream home, but during that process there are a few things you will want to consider prior to making that jump. Maintaining your credit score is pertinent to the process of applying for mortgages; good credit scores can get you better mortgage rates and opportunities. Since the holiday season is almost upon us, this will be especially important to keep in mind.
Here, we have accumulated a list of ways in which you can help maintain your credit score:
- Don’t change your job before applying for a home loan.
Along with that, while searching for a home wrong time to become self-employed or quit your job. You want to show lenders stability, which means you’ll be less likely to default on the loan.
- Don’t change banks.
Like your employment, you want your banking history to show stability.
- Don’t buy a car or truck or any other form of transportation that you must finance.
Buying anything on credit increases your debt-to-income ratio and that’s something lenders don’t want to see.
- Don’t buy furniture on credit before buying your house.
Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.
- Don’t be late on your credit card payments or charge excessively.
You need to show a track record of managing your payments responsibly.
- Don’t make large deposits into your bank accounts.
Lenders like to see that your down payment is sitting in your account for at least two months. This is what they call seasoning. Banks do not like to see the funds just disappear out of there either.
- Don’t co-sign a loan for anyone.
Even if you’re not the one making the payments on that loan, it increases your debt-to-income ratio.
- Don’t have inquiries made into your credit.
Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually does not affect your credit score. However, opening credit accounts within a short period of time represents some risk and your credit could take a hit.
- Do not consolidate all your cards onto one card.
This will most likely change your ratio in a negative way.
- Do not request to lower your limit on a credit card.
If you do, the ratio will increase. This will lower your credit score.
- Cancelling older cards can be a mistake.
Some people may worry that lenders might not like that they have so many cards. The problem is that lenders like to see that you have a long-term record of credit.
- It is a bad idea to close an account which has a balance.
However, if you raise your limit you can lower your overall ratio and improve your score. You will need to be disciplined and make sure that you don’t use the extra funds you now have available.
These twelve simple tips can help keep you on the right track concerning your credit score. If you wish for more information in improving your credit score, Credit.com has listed ways in which you can do just that.