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
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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,
www.LynchburgLender.com, 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
(www.nmlsconsumeraccess.org), Equal Housing
Opportunity
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