Is Your Credit Mortgage Ready

Since the last recession, getting your credit mortgage ready is a big challenge for some first-time home-buyers. Here are a few tips to help you out.

Good Habits to Get Your Credit Mortgage Ready

Putting yourself on a stricter household budget for a few months or up to a whole year, combined with making credit card payments on time and not skipping payments is the best way to get your credit mortgage ready before beginning your new home search.

Track Monthly Payments to Make Them On Time

Skipping a payment or being past 30-days late on a payment is a red flag. Think about how this reflects on your dependability in making a mortgage payment on time. Work hard on making payments on time or early for at least a whole year, if your payment history has been inconsistent. Do this before you apply for a home loan.

On-time payments have the largest influence on your Credit Score. If you’re not sure what your current credit score is, you can ask any of the three credit bureaus for a free report once a year.

Keep Low Balances

Do you have more than one credit card balance to maintain? Try your best to keep your balance below 30 per cent of the allowed credit limit on each credit card.

Have a Long History of Good Credit

Having a long history of good credit is really helpful. This displays that you’re a reliable account holder who can maintain your accounts. That does not mean we’re advising you to open several credit card accounts. No. But if you have a long history of good credit, of course this helps you.

Basically, the more history you have, the better. And of course, if that credit history is excellent, than you’ve positioned yourself to make things much easier during any loan approval process – usually.

If you’ve paid off a credit card, it’s better to keep it at a zero balance than to close it. Let it work in your favor.

Opening New Credit

If you have to open a new line of credit, it may have a small impact on your credit score. When an account is created, the creditor performs an inquiry against your credit. This might cause a few point deductions, but if there are many in a short time, it most definitively will cause a problem. If you decide to open a new line of credit do your homework, and apply for a single card – not multiple cards.

Take Care of the Issues On Your Credit Score

Be sure to take care of fixing any problems or errors on your credit report. This is the top way most folks miss out on getting a loan approval. If there are serious reports on your credit such as collections accounts, or tax liens, or bankruptcies, this greatly lessens your chances of becoming a homeowner. Creditors see these and hesitate to give you a loan approval because your history is not good.

Check your Credit Report

Did you know you can check your credit for free once a year from each of the three credit agencies? You definitely want to make it a habit to check your credit report so you can take action to eliminate errors.

(By the way, if you’re the victim of a identity theft, be sure to report that to all three agencies immediately.)

If you’re dreaming of buying your first home and need to improve your credit, be sure to get your credit in order, develop good habits of paying on time, keep your balances as low as possible — even if it means a zero balance. Don’t close a credit card account if you can help it: let it help you improve your credit rating. Be sure to report errors to the credit agencies and follow up to make sure they’ve removed the errors.

If you have any questions, please contact us.