Repairing credit before buying a house
Repairing your credit before you buy a home
Admittedly not the first thing people think of when preparing to buy a home, it may be imperative to repair your credit before you start shopping for that new house. A bad credit score can seriously affect your chances of properly financing your purchase and therefore cause you to lose out on your next home. So, before you go searching around on the Internet for that dream home, Tessier Team recommends that you sit down with a financial advisor or a mortgage specialist. They will go through all your financials with you and make recommendations for any steps that you will have to take before qualifying for a mortgage.
Even if you aren’t planning to buy for another year or two, you should take a look at where you stand. Here are some steps you can take on your own before you even meet with an advisor.
Get a copy of your credit report
It’s bad enough you have to deal with your own credit mistakes without suffering the mistakes of others. Companies make mistakes, too. Go over your credit report and check for anything that doesn’t seem right. If you find something, call the company and explain that they may have made a mistake. Do so politely, though. You don’t want to get the person you are dealing with on the other end of the line upset, they will be more inclined to help you if you are nice to them.
Pay your bills on time
Did you know that paying on time can account for 35% of credit score? This is a seriously good reason to pay your bills on time! If you know that sometimes you forget to do so, set up reminders in your calendar or on your phone to make sure you don’t miss those payment deadlines. Also, remember that if you are using online banking, it can take a few days for the money to transfer so it’s better to send in the payment two days prior to the due date.
Stop using those credit cards as much
Don’t cancel the cards, there’s no point. The mark will still be made on your credit score. If you want to cancel one, cancel the last one you applied for. Your oldest credit card is the most important in terms of your credit history.
Try and keep the balance you carry on your cards at 50% of the total, or below. Showing that you are not maxing out any of your cards is important in terms of your credit score.
If you are comfortable with it, see if you can borrow some money from family to pay down the credit. Then, draw up a contract of how much you will pay them, how often and with what interest rate. They are lending you money to help you, you should be paying them interest! It doesn’t have to be a big amount, just a few percent will do.
If you take these steps, by the time you meet a mortgage specialist, you’ll be well on your way to the purchase of your first house!
If you have any questions, please contact a mortgage specialist, such as Brigitte Tessier. You can reach her at 613-294-4000.