Home buying tip 1


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Home buying tip 1

  1. 1. FreePrequals.com STEPS TO SUCCESSFUL HOME BUYING Step One - Review and Improve Your Credit Most people don't know what is on their credit report. There have been cases where fraudulent information or errors have damaged buyer credit without there having been any knowledge of it. In this day and age it is imperative that any consumer looking to make big purchases be aware that if they do not have the cash for the big ticket items they will need to protect their credit. Remember that the better your credit looks to the lender the better deal you will walk away with. LETS LOOK AT SOME CREDIT SCORING MYTHS 1.CLOSING ACCOUNTS CAN HELP YOUR CREDIT SCORE CLOSING ACCOUNTS CAN NEVER HELP YOUR CREDIT SCORE AND MAY HURT IT! While it’s true that having too many open accounts can hurt your score, you can’t repair it by closing the account and you may actually make things worse. WHY? One measure of your credit score is the difference between your available credit and what you’re using. Close the accounts and your total available credit shrinks, making the percentage higher. AND your score also tracks the length of your credit history. Shutting down older accounts can also make your credit history look younger than it is, which will reduce your score. 2.CHECKING YOUR FICO SCORE CAN HURT YOUR CREDIT NOT TRUE – Applying for new credit is generally what hurts your score. Ordering a copy of your own credit report or credit score doesn’t count. Those mass inquiries made by credit card lenders, who are trying to decide whether to send you an offer for a pre - approved card aren’t going to hurt you, UNLESS, you actually take them up on their offers. If you want to minimize the damage from credit inquiries, make sure that when you shop for a mortgage you do so in a fairly short period of time. The FICO score treats multiple inquiries in a 14-day period as just one inquiry and ignores all inquiries made within 30 days prior to the day the score is computed. For most people, one inquiry will generally knock no more than 5 points off a score. 3.CREDIT COUNSELING WILL HURT YOUR SCORE AS MUCH AS A BANKRUPTCY. The current FICO formula ignores any reference to credit counseling that may be in your file. Your ability to get a loan could still be hurt by credit counseling, however. If your current creditors report you as late because you’re not paying what you originally owed or
  2. 2. because your credit counselor isn’t sending your payments on time, your score can be affected. Mortgage lenders generally treat credit counseling participants the same as if they had filed for Chapter 13 bankruptcy. If you plan to get a mortgage soon, and you’re not already behind on your debts, it’s probably smart to steer clear of credit counseling. If you’re already in trouble, however, a good credit counseling agency might help you get back on track. 4. YOUR FICO SCORE IS THE ONLY SCORE YOU NEED TO CHECK Even though all three of the credit bureaus use the FICO risk analysis, the scores may vary among them. This is a reflection of the manner in which creditors report and the bureaus don’t all share the same data. For instance, EXPERIAN is the predominant bureaus for California, so it will generally list more accounts for you than another, and the differences (in types of accounts, payment histories, credit limits and balances) will be reflected in the score that bureau computes for you. Because of those differences, it DOES make sense to pull and examine your credit reports from all three bureaus before you apply for a big loan like a mortgage. Many mortgage lenders take the middle score from the three bureaus when making their decisions, so fixing errors in all three reports before you shop for a loan is smart. The solutions to improve your credit scores are the same in all cases: 1.Correct errors 2.Pay your bills on time 3.Pay down your debt 4.Apply for credit sparingly FreePrequals.com