Miami Home Loan staff interviews our partners at Mortgage Market Guide and Credit Technologies to determine some credit myths and mistakes made in efforts to achieve good credit.
Good credit is well worth the effort it takes to both achieve and preserve it. If you have good credit, the following tips will help you keep it that way. If you are looking to improve your credit, however, now is the time to get started. Give us a call.
We’ll examine your credit and find out exactly where you stand, and, make suggestions on what you can do to improve you overall score. (We have an additional story on what makes up your credit score).
If you plan on entering into a loan transaction in the next 6 to 12 months, you simply cannot afford to make the following credit mistakes:
Don’t fall behind on existing accounts. This includes your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.
Don’t pay off old collections or charge-offs during the loan process. Paying collections will decrease your credit score immediately due to the “date of last activity” becoming recent. This is another reason we suggest you review your credit at least twice annually to confirm the accuracy of the report. If you elect to pay them off, you will want to confirm the following: 1) Validate that the debt is yours, 2) The creditor agrees to give you a letter of deletion or report “paid as agreed”
Don’t close credit card accounts. If you close a credit card account, it will appear to the bureaus your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure that it is an account you opened recently.
Don’t max out or overcharge your credit accounts. This is the fastest way to bring about an immediate drop of 50-100 points in your credit score. Try to keep your credit card balances below 30% of their available limit at all times prior to and during the loan process. If you decide to pay down balances, do it across the board, and do it at least six months prior to applying for the loan.
Don’t consolidate your debt onto 1 or 2 credit cards. It seems like it would be the smart thing to do; however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after closing.
Don’t do anything that will cause a red flag to be raised by the scoring system. This would include adding new accounts, new large purchase, co-signing on a loan, or changing your name or address with the bureaus. Limit your activity on your report, six months prior to applying for a loan. You score will improve, and, less explanation letters will be required.
Don’t do it alone. If you feel that the credit challenges you’re facing are too much, or you don’t have enough time to do the work necessary to improve your own credit, don’t give up. Give us a call. We can help. In many cases, small changes to your credit profile could yield big results that could save you thousands of dollars in interest on your mortgage. However, if professional credit repair does become necessary, we’ll gladly provide you with a referral to an experienced professional credit repair specialist you can trust.
So, if you need to review your credit before you apply for a Miami Home Mortgage, please call me, Jim (James) Carter, from Element Funding, at 305-525-6742to help you get the best financing solution. We at Element Funding, will help you with an exceptional Miami Home Mortgage.