The First Step to Buying Your Property: Having Good Credit!
I cannot stress this enough… the FIRST step in buying a home is to assure you are in good standing with your credit! You've probably heard it many times before, but I am here to remind you about it — your credit score plays a crucial role in determining your interest rate when getting a mortgage—unless, of course, you plan to be an all-cash buyer. So here are my quick tips to help you achieve a higher credit score:
Check Your Credit Report: Regularly review your credit report for any inaccuracies or errors. Dispute any discrepancies you find to ensure your credit information is correct. Credit Karma is a great tool for this — so please check it out!
Pay Bills on Time: Timely payment of your bills, including credit cards, loans, and utilities, is one of the most influential factors in maintaining a good credit score. Have a late payment posted on your credit report? — try to request for it to be forgiven by the company (p.s it helps to be nice).
Under 30% Credit Card Balance Rule: Aim to keep your credit card balances low relative to your credit limits. High utilization can negatively impact your score, so try to keep it below 30% of your credit limit. Example:
Sally has a 4 credit cards which add up to a total of $4,000. Sally has a great credit score due to only using 30% of that which equals: $1,200 and making on time payments to her accounts.
Don't Close Old Accounts!!(Unless you really must due to high fees and APR): he length of your credit history matters. Even if you're not using them regularly, keeping old accounts open demonstrates a longer credit history, which can be beneficial. Heck — buy a cup of coffee with that credit card and pay it off the next day! Keep in mind credit card companies can also close your account due to inactivity, so you’d want to be sure to use it here and there to avoid closure (but don’t sink yourself in debt, of course!).
Diversify Your Credit Mix: Having a mix of different types of credit accounts like: credit cards, car loans, personal loans can positively impact your credit score, as it shows your ability to manage various types of credit responsibly.
"Avoid Opening Too Many New Accounts—UNLESS you apply within the 14-day period rule. Did you know that if you apply for several credit cards all within a 14-day window, you will only receive one significant hit on your credit? Now, that's a hack you don't hear about every day!
Become an Authorized User: This is by far one of my favorite ways I’ve grown my credit score! If possible, become an authorized user on someone else's credit account, such as a family member's credit card, to benefit from their positive credit history! What a HACK!
Set Up Payment Reminders: Missing payments can significantly harm your credit score. Set up payment reminders or automatic payments to ensure you never miss a due date.
Be Patient: Building or improving your credit score takes time. Consistent, responsible financial behavior will gradually lead to a better score.
While I am not a credit or financial advisor, this advice is intended to assist you in getting started on your journey toward homeownership. Every situation is unique and varies from case to case. It is advisable to consult with a financial or credit advisor to guide you in your initial steps. Keep in mind that a strong credit score not only helps you secure a favorable interest rate on your mortgage but also has an impact on various other financial aspects of your life. By adhering to these suggestions, you will be better prepared to achieve and sustain a higher credit score, positioning yourself for success when pursuing your dream home!
"Now, why do I emphasize that the first step to buying a property is having a good credit score? It's because I want you to secure a great interest rate on your home loan. Consider this: your interest rate will determine both your monthly mortgage payment and, equally important, the amount of interest you'll pay over the life of the loan."
Your Cheerleader,
Mayra Ascencio
