The Real Estate Browser Volume 10, Issue 2 - Page 14

14 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 10 Number 2 Credit Basics Everyone Should Know By Sherry Brady, Branch Manager, Summit Mortgage Corporation Whether you are a first-time homebuyer, or you’re about to or negative data, then paying your credit cards down purchase your fifth home, there is will give you the most “bang for your buck” when it one thing that we all have in common: the need for good credit. What is your credit score? comes to increasing your score. Do you know what things you might be able to do to improve it? How much will your credit score impact the type of loan you qualify for, the interest rate you get, or whether you’ll be able to get a loan at all? If you are considering buying a home within the next 12 months should know what information is reflected on your credit report. The first step is to talk to your lender who will pull your credit report and score. Your lender can advise you what loan types you will qualify for based on your score, and other factors, and if there is any- thing on your report that needs to be cleared up, they can let you know. score; if you don’t have any outstanding collections If everything is accurate though, and your score is still lower than you’d like, we may be able to advise you of some things you could do to improve it. There are several factors considered in the calcula- tion of your credit score, but just two things make up 65% of your score! They are: do is pay your bills on Other things that impact your score are how many inquiries you have, how many new accounts you have, and your “mix” of credit. Ideally, you should have both installment and revolving accounts report- ing. Don’t apply for a lot of new credit when you’re trying to prepare to buy a home; multiple recent inquires – especially for credit cards – can lower your score. Also, whether you’ve paid your rent on-time for the last 12 months will probably be looked at, espe- cially if you have very little other credit showing up on your credit report. Be sure to always pay your rent on time, and in a way that can be documented, such as by check or auto-drafted from your check- ing account. Try to avoid paying your rent in cash. That’s very difficult, if not impossible, to prove a pay- ment history for. Whether we like it or not, our credit score plays a role in everything we do these days – from buying time? and do you use revolving credit responsibly? a home, to getting a job. One thing is for certain: (i.e. are your credit cards “max out”?). good credit doesn’t just happen, and today, more than Obviously, you know why it’s important to pay your bills on ever, it’s important to actively manage your credit rat- time, but why does not maxing out your credit card ing. limits matter so much? Because if your credit cards are charged up to their limits, this gives the appear- ance that you can’t manage your credit wisely and By Sherry Brady, NMLS 217258, Branch Manager,, 434-237-1027 Summit Mortgage Corporation, NMLS #1041, perhaps that you are even using credit cards to live on. Paying down credit cards is probably the area where you could have the greatest impact on your (, Equal Housing Opportunity