In order to purchase a home, a buyer must have adequate credit. Without good credit, you cannot get a mortgage to finance the home. Now is an especially important time to have decent credit because mortgage rates are low. You would not want to miss out on these rates because of a lousy credit score. To help out potential home buyers, Yahoo! Finance compiled five common credit mistakes that you should avoid to maintain good credit.
Don’t pay late! 35 percent of your credit score is accounted for by timeliness of payments, according to myFICO.
Applying for new credit. According to Yahoo!, just applying for credit can have a detrimental affect on your credit score.
“According the National Association of Realtors® (NAR), applying and being approved for a new line of credit can cause concern with lenders who might take it as a sign that there’s a higher risk of default due to increased spending. Bottom line, if your potential buyers are planning to apply for a home loan in the near future, make sure they don’t apply for anything else around the same time, Yahoo! Finance warns,” wrote Florida Realtors.
Having high balances. It might not be sufficient just to pay minimum credit card payments. A loan candidate with a high balance is not as favorable as a lower one.
Too much disputing. Of course, it is important to be secure and dispute false charges. However, some lenders will see excess disputes as an attempt to “game” your credit score.
Failing to have any credit history.
“Whether you’re buying a home, car or big-ticket luxury item, the first thing most lenders typically look at is your credit score. If you have limited or no credit history, you’ll need to begin building your credit and boost your score before you apply for a major loan,” wrote Yahoo! For this reason, it is important to first establish credit and then avoid these common credit mistakes.
If you are looking for a property in Miami but are concerned about your credit or financing the home, please contact RE/MAX Paradise today.