The ultimate goal of home buying is to see the house you call home and for your children to raise their families in comfort. But once you buy the first home, you still have to work on your credit history whether you plan to build new credit or rebuild credit damage.
A few months after buying the home, you may have to apply for a mortgage. Although this doesn’t necessarily require credit verification for loan approval, normally the new home buyer has a new credit on their credit report and existing mortgages are being paid-off or settled.
For reference, here’s how not to raise your credit score for buying a new home:
originating a mortgage before having paid quotes on credit improvement, credit repair, and your own credit report. (Be sure to obtain quotes for all three creditor reports.) If you’re charging more than half of your current mortgage and begin the term of the contract before paying off most of your individual creditor accounts.
A bad credit history is a major drawback for purchasing a new home. Mortgage lenders require 2 years of credit history as well as paying off individual creditors on time and not leaving open charge cards balances.
Here’s what you do, then. At the beginning of your mortgage term, the lender will pull your credit report and create a master file with Equifax, Experian, and Trans Union.
Here’s what happens if you have charge cards that are being paid off or half paid off or if you are paying off monthly installments on your credit cards. You must pay these on time or bring your accounts current and not max out credit cards again.
In addition, you must maintain low balance on credit cards, student loans or car loans to build a credit history. It’s also important to “catch-up past due credit accounts.”
Here’s what happens if you add more accounts to your credit history:
You have to consistently check your credit history from time to time. You want to get new accounts and maintain partial balances on under five accounts. It’s important to keep these accounts current. Avoid opening new accounts solely based on free offers. It may lower your score and jeopardize your efforts to rebuild your credit.
Lenders and credit bureaus only recommend credit lines over which they have complete control of. Credit reporting agencies and creditors frown upon alternative credit card and finance companies.
There are credit card and finance company sources that provide direct credit and debit card approval, but these are usually very costly.
To effectively increase your credit score, consider enrolling in a two-year program at a reputable credit-counseling organization.
Then apply for a secured credit card to begin establishing a good repayment history.
Properly establishing credit “piggy-backing” will help you establish a solid credit history. This type of assistance is going to help you in many situations in regard to your buying power as well as your credit power.
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