14 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 8 Number 7 www . LynchburgRealEstateBrowser . com
Take Control of Your Credit
By Sherry Brady , NMLS 217258 , Branch Manager , Summit Mortgage Corporation
Have you ever heard the old saying “ you have to have money to make money ”? The same is true with many things in life . It ’ s easier to get a job , if you already have a job , or at least some work experience . It ’ s a lot easier to make money , if you have some money to invest . And the truth that I encounter on a daily basis is that it ’ s a lot easier to get credit , if you have credit ; particularly if the credit you are trying to get is a mortgage loan .
If you ’ re hoping to buy a home someday , or make any purchase that requires the use of credit , you need to build a credit history . It ’ s difficult ( dare I say impossible ) to convince a lender to loan you ten ’ s , or hundred ’ s , of thousands of dollars if you have no way of proving that you ’ ve ever successfully repaid a loan in the past . What ’ s important to understand is that you can ’ t wait until the day before you start looking at houses to think about this ; you need to be working on your credit profile month ’ s in advance .
There are three components to getting approved for a mortgage loan : Credit ( will you pay ), Capacity ( can you pay ), and Collateral ( is what you ’ re buying worth the price you ’ re paying for it ). If the first one – credit – isn ’ t acceptable , then the other two won ’ t even be evaluated in most cases . When it comes to determining if you have an acceptable credit history , a mortgage lender is looking for a certain credit score , but they also want to see a minimum of two to three lines of credit with at least 12 months of recent history being reported on them .
If you have two or three accounts , which are open , active , paid on time , and not maxed out , then a good credit score will usually follow . Here is a breakdown of factors that contribute to a good credit score : 1 . Payment history ( do you pay your bills on time ); 2 . Amount owed ( are your credit cards maxed out ); 3 . Length of credit history ( how long have your managed credit ); 4 . Credit mix ( do you have various types of credit such as installment loans , credit cards , and a mortgage ); and 5 . New credit ( have you recently opened several new lines of credit ).
Lenders also now look at trended credit data , so it ’ s possible to see a two-year historical perspective of a potential client ’ s credit utilization and habits . This will show lenders whether you typically carry a balance , or charge something on your credit card and pay it off immediately , also whether you typically pay the minimum or more than the minimum . Whether you pay your bills on time has always been important , and now , how you pay will also be a consideration .
These days , we have plenty of online tools designed to make the process of getting your loan easier than ever before , but it still requires some thought and planning on your part . The best place for you to start is by talking to a qualified lender who can lead you through the process . Be sure to contact us early in the process . While there ’ s much to think about , once you have an experienced guide you can relax a little , enjoy the journey , and start picking out your paint colors ! http :// www . lynchburgrealestatebrowser . com / index . php ?/ properties / price _ reduced http :// www . lynchburgrealestatebrowser . com / index . php ?/ properties / price _ reduced for the latest REDUCED properties . for the NEWEST LISTINGS .
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