In our previous blog, we outlined the importance of obtaining a good credit score and how it can influence the home buying process. Whether you are a first time home buyer in Calgary or are looking to establish a great credit score, here are some tips that can help.
1) Strengthen Your History
For those who may have little to no credit history, it would be wise to be able to obtain credit to help strengthen your position. Items such as a secured line of credits, personal loans, credit cards and auto loans are some options to choose from to help you strengthen your credit history. Do not open or obtain multiple credits rapidly.
2) Utilize What You Have
A great option to take into consideration would be to increase the amount on your current credit card or loan, instead of obtaining a new one. You should to always pay the amount due earlier than the due date, if possible. For example, if you charge something on your credit card, pay it off right away if possible. This help strengthens your credit score and eliminates juggling multiple credit sources.
3) Set Payments to Be Automatic
Making your payments automatic can eliminate the chances of forgetting to make a payment, or paying too late. Being late even once on a payment can set your credit score back 20 points, according to parents.com. Create reminders for yourself, or schedule payments based on your history to be automatically made before the due date.
4) Use Your Credit Card
If you have credit cards and are not using them, it’s harder to create a positive history. It is recommended that you use your credit card, in moderation, to help build your positive history. This is not to say that you should max it out to reach near the end of your limit but to have a healthy balance between using your card, and paying it off. Keeping your credit card balance at 30% of its limit will help increase your credit score.
5) Check Your Credit History
Some statistics show that almost 80% of credit reports have an inaccuracy. These mistakes can cost an individual 5 to 50 points off their credit scores. Keeping a close eye on your credit report and dispute any errors. You can check your credit history using a trusted company such as TransUnion, which let you report errors online.
Understanding your credit score and creating a budget is the first step Home Buyer Real Estate Agents will recommend to their clients. If you find that your credit score is not up to par with expectations, then it’s important to start rebuilding your credit right away and follow the necessary steps. For more advice on finances, it is also recommended to talk to your potential lenders, as each mortgage brokers will require slightly different qualifications. Once you have completed this step, you will be closer to obtaining your dream home, making the home buying process more enjoyable.