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Home Mortgage Credit Tips

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Get Your Credit Straight

If you're considering taking advantage of these super low interest rates to get a new (or refinance an existing) home mortgage (or any other kind of loan for that matter), you need to make sure your credit is in order. If you have no idea what that means, this brief lens should be a good place for you to start.

1. Remember to always pay bills on time.

This is a vital point in your efforts to establish a good score. A 30 day late last month is more detrimental than a 90 day late from a few years ago. If you do have some missed payments recently, get yourself current as quickly as you can and make sure you remain current.

2. Have credit cards, but manage them responsibly.

Keep balances low. The best way to get started raising you credit score is to eliminate (or at least pay down) your revolving credit debt. If this isn't something that can be done, you could consider spreading the debt across multiple existing card account, but try to keep them to less than 50 percent of whatever the card's limit is. However%u2026 please pay attention to the next point:

3. Be cautious about getting new credit

Never apply for or open a new account unless you really need it (do not get lured into point of purchase credit offers just to save a few bucks only to later find that you have too many open lines of credit).

4. Do not close old or unused credit cards as a short term strategy to help improve your score.

In fact, having accounts that are 'aged' can be a good thing as it shows you can handle credit and that you're not totally new to the world of debt managmement. At the same time though, do not open a whole bunch of brand new accounts too fast; doing so will lower the cumulative age of your accounts and may make it look like you currently need to borrow a bunch of money to just get by (that's not a good thing to have a potential lender think about your situation).

5. Limit your loan camparison shopping

If you are looking for a large loan (for a home or a car, for example), keep your rate shopping to a limited time-frame (preferably 14 days). By doing this, you will minimize the effect of having multiple credit inquiries, and therefore your overall score.

6. "Closing" does not equal "Fixing"

Recognize that closing an account that shows a late payment, or paying off a collection account|, isn't going to remove that blemish from your credit report.

7. Keep track of your personal credit report without paying anyone to do it for you.

Don't forget, if you order your own credit report you will not affect your FICO score just so long as you order it directly from the credit reporting agencies or from any group authorized to provide reports to consumers, such as www.myFICO.com or www.annualcreditreport.com