• Credit Score and Obtaining a Loan

Credit Score And Obtaining A Loan

When preparing for the purchase of a home, one of the things you must address up front is your credit. Most loan programs want a credit score of 620 or higher, so the question I get asked a lot is, how do I help increase my credit score prior to purchasing a home? Well, there are a couple different ways that you can go about managing your credit that should have positive results. First, stay away from using one specific credit card. Many people think it is helpful to transfer balances on higher interest rate cards to 0% interest rate cards. This might be a good financial strategy however not when it comes to your credit score. The reason is typically, one of the ways that credit is scored is by how much of a balance you carry versus your total credit limit. If you are carrying a balance that is pretty close to your credit limit, it’s actually a negative to your credit score and it could bring your score down.So, what I would suggest is use several different credit cards and spread out balances if you do keep balances. This will show the bureaus that you're able to maintain a lower amount of credit on one specific card, and then it’ll also show you’re making monthly payments on time. This should help grow your credit over time and you’ll be ready to buy a house in no time.