CREDIT SCORE TIPS FOR THOSE WHO ARE PURCHASING A PROPERTY OR APPLYING FOR FINANCING:
- Check your credit scores at least a year or two prior to looking for properties.
- If you are purchasing your scores online buy them from the MYFICO.com site. Other sites may have totally different score ranges then the score the banker is using for loan approval. There are Fico, Vantage, Plus, Equifax, Credit Karma, and many more scores available online.
- Lenders usually take the “middle score” not the “median or average” of the three credit bureau Fico scores. Order all three Experian, Trans Union, and Equifax Fico scores from the site to find out what your middle score is.
- A FICO score of a 740 plus is considered excellent. If you have a score under a 740 talk to a credit expert and get advice on how to improve it. Do not get credit advice from a Dentist, Uncle, Parent, or anyone who is not credit qualified. Sadly so many do and wind up hurting their credit.
- Pulling your own credit scores at the MYFICO site will not drop your scores at all.
- Keeping balances low “under 10% of aggregate and individual limits” on revolving credit for at least 2 months prior to mortgage application will give creditors enough time to make sure balance updates are posted to the three credit bureaus. This will reflect a higher score when the banker pulls credit.
- Do not co-sign for any credit if you are not in full control of making timely payments or prepared to pay the full debt yourself.
- Do not open credit or close credit since scores can drop dramatically. Opening credit can reduce the average age of credit. Closing credit can take away from a well balanced credit portfolio or reduce aggregate limits on revolving credit which can drop scores dramatically. In some cases credit needs to be opened for loan approval but only your banker can advise you of this.
- Make sure all payments are paid on time and if you set up auto pay write down/file confirmation numbers.
- If you change bank accounts or close a credit card make sure ALL auto pay’s associated with the account are transferred to the new account immediately. Many consumers forget to put E-Z pass or their gym payments on the new bank account or credit card and wind up with new late payments or collections on credit.
- Remember the higher your Fico score the more options you will have as a borrower. Even .25% more of an interest rate can mean higher payments costing hundreds of thousands of dollars over the life of a 30 year loan. A higher credit score can also give a buyer the ability to qualify for a larger mortgage if needed.