The average home shopper knows very little about the whole credit scoring process. There are ways to improve credit scores and obtain a loan for the home you really want.
Begin by reviewing your credit report. Consumers may now receive one free credit report annually. Go to www.annualcreditreport.com to request a free report from each of the three credit reporting companies.
Most A-Paper scores generally begin around 680. Increasing your score just five points can save a significant amount of money. For example, if your score is 676 and you increase it to 681, then you could save thousands of dollars as a result of a slight improvement to your loan’s interest rate.
While credit repair is necessary for some, it is not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
1. Evenly distribute your credit card debt to change the ratio of debt to available credit. If you have debt on only one card and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer to the ideal bracket.
2. Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is do not close those old accounts.
3. Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from two to 50 points. When it comes to mortgage and auto loans, even though you are only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry.
Credit scores do not change overnight. Improving them requires time and a diligent effort on your part, so it is a good idea to review your credit at least three to six months prior to submitting your application for home financing. If you are looking to purchase a home in 2007, I invite you to call me for a complimentary loan consultation. This no-obligation call takes less than 10 minutes over the phone and may save you time and money.
For more information, please call Heidi Rivas of Crown Home Loans at 661-287-9888 or visit www.LoanGal.com .