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Credit scores, along with your overall income and debt, are big factors in
determining whether you’ll qualify for a loan and what your loan terms will be.
So, keep your credit score high by doing the following:
- Check for and correct any errors in your credit report. Mistakes happen,
and you could be paying for someone else’s poor financial management.
- Pay down credit card bills. If possible, pay off the entire balance every
month. Transferring credit card debt from one card to another could lower
your score.
- Don’t charge your credit cards to the maximum limit.
- Wait 12 months after credit difficulties to apply for a mortgage. You’re
penalized less for problems after a year.
- Don’t order items for your new home on credit — such as appliances and
furniture — until after the loan is approved. The amounts will add to your
debt.
- Don’t open new credit card accounts before applying for a mortgage. Too
much available credit can lower your score.
- Shop for mortgage rates all at once. Too many credit applications can
lower your score, but multiple inquiries from the same type of lender are
counted as one inquiry if submitted over a short period of time.
- Avoid finance companies. Even if you pay the loan on time, the interest
is high and it will probably be considered a sign of poor credit management.
This information is copyrighted by the Fannie Mae Foundation and is used
with permission of the Fannie Mae Foundation. To obtain a complete copy of
the publication, Knowing and Understanding Your Credit, visit
www.homebuyingguide.org.
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