Now, more than ever, it is important to maintain a good credit score. It will likely mean the difference between securing a home loan or not. Now is not the time to let old habits pr debts stand in the way of taking advantage of the historically low interest rates and low home prices.
The first thing you need to do is to learn the facts. What is the current state of your credit report and score? You can visit sites like annualcreditreport.com three times a year to view your credit report free of charge. You will, however, need to pay a small fee in order to view your score.
Once you have your report, check it over carefully for any errors that may have occurred. This is not a time to have you identity stolen and credit ruined. Other than identity theft, there could also be errors and omissions that need to be corrected. If you have had any errors corrected you must next contact each of the three major credit reporting bureaus to have your report updated.
There are also now many programs available to protect against identity theft. Many banks offer easy ways to monitor account and card activity. If unusual spending occurs on your account they will block any purchases and contact you immediately to confirm that you are the person making them.
Now that you have taken these steps and your existing report is in good shape and safeguarded from theft, it's time to start making repairs. First you will need to reduce the amount of hard inquiries. When involved in the home buying process, do not start opening new accounts or lines of credit.
Resist the urge to buy the new car, call DirecTV, and buy new furniture on credit. Wait to make those purchases until after your new home had been closed upon. Your future interest rates will reflect your patience.
Pay down balances on credit cards to the best of you ability. While some revolving accounts like car payment and home mortgages show you are a responsible borrower, having high balances on your cards will dramatically reduce your score.
Don't pay off cards just to close them, however, if you're looking to raise your score. The way this works is this: If you have a total of $10,000 in credit available and you carry a balance of $5,000, you are using 50% of your available credit. That is too high.
If you close a card and are using $5,000 of now $7,000 available credit, you are using 71 percent of your available credit and are worse off than you were before!
The key here is to pay down balances as much as you can and keep that percentage low. Once you're positive that your mortgage and loans are in place you can then think about closing credit card accounts.
Next, never pay late. Setting up payment reminders or automatic bill pay is a good option for many people.
If you fear that you will miss a payment or will be late, contact lenders or creditors before this happens. Many lenders will work with you yo make your payment without reporting the missed month to the credit bureaus. Every reported late payment docks your score and stays on your report for years.
Lastly, pay off debt instead of moving it from one card to another. It might be tempting to put this debt on that card and so on, but that doesn't remove the negative history from your credit report. In fact, if you have now opened a new card, you might have just dinged your score.
Responsible spending and payments are how you build a good credit report. There is no overnight fix to a score! Do your work to pay down debt and over the next months and years your credit score will rise significant, possibly making you eligible for a home loan that was previously out of reach.
To get more information about increasing you credit score and getting help in doing so, please go to: http://tripointcreditrepair.com/
To read more about raising your credit score to become eligible for a home loan, please visit: http://www.californiamortgagedirect.com/education-credit-rating
