Your credit score is a vital part of securing a home loan when you are ready to buy your new house. While it might seem like some elusive number that can’t be adjusted, raising it can give you a better interest rate to work with and lower your home loan payments in the long run. At the same time, there are things you may be doing that actually hurt your credit score, too. That’s what we’re taking a look at in this blog post.
How to Avoid Hurting your Credit Score
Once you have decided you would like to buy a home, it’s a good idea to review your finances, look over your budget, and consider your credit score. If you haven’t been great at mastering the habits that contribute to a good credit score, examine the ways you can hurt your credit and work to eliminate them in your routines. You’ll be glad you did when you sit down with your loan agent and your credit score has gone up.
What Can Damage a Credit Score Most?
- Paying Bills Late Being late on paying bills can quickly damage your credit score. It’s actually the most notable factor in determining your score. Do what you need to pay your bills timely. Just understanding this component can be motivating to meet your bill deadlines on time.
- Carrying Large Credit Card Debt Credit cards are a handy and valuable tool for many of life’s buying needs. Credit cards can also be helpful for your score when the credit utilization ratio stays below 30%. It can be complicated to understand, but using credit cards as an extension of a budget you stay within and pay off each month will be highly beneficial to your credit score. And, this can help you buy a home.
- Non-essential Debt Taking out loans or new credit cards to pay for things like vacations or other non-essential purchases can be harmful to your wallet and your credit score. And, it can tie up funds you could use for a down payment on a new home. Only use a loan when it’s necessary. Doing so will help prevent credit score damage, and even more debt if the loans fall into arrears.
- Closing Credit Cards It’s true – it’s better for your credit score if you leave your credit card open and available instead of closing it. It states that you have a good record with this card and have a good payment history. If you close the card, the benefits you accumulated by paying it off, paying on time, and holding the credit will be gone. We do like to note that if a card has an annual fee and you aren’t benefiting from the use of the card, this can outweigh the benefit of keeping open.
- Overlooking Details Don’t become complacent with your bills, budget, and finances. Review them regularly, pay them on time, and stay within your budget to avoid hurting your credit score.
What Boosts Your Credit Score the Most?
Pay your bills by the due dates, don’t overextend yourself, and keep your house buying goals in mind. If you need to pay down debt, set up an autopay bill system. Remember, consistency is the key to building a good score and buying the home you deserve! Your future self will thank you.
Working with an Experienced Memphis Area Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly regarded and well-informed local real estate agent. You want someone who you can trust to give you the best advice and know-how for your new home purchase or sale. Check out my other great real estate articles to help you through your home selling and buying experience here in Memphis. Staging homes for sale is also part of my expertise. Please ask me about it when you reach out.
Take a minute to learn more about me. With 20 years of top-notch service for my clients, I can guide you with your house sale, new home purchase, or buying a great parcel of land. As a top, licensed real estate agent in the Memphis area, showing you the best properties for you and your family is my goal!
Contact me at (901) 828-8919 or drop me a quick note at angie@angiekelley.com and we can speak in person about your plans and options.
