Time for a Credit Check!
How to clean up your credit as you prepare to buy a home
There are a few very important things to remember once you decide you want to buy a home.
Staying on top of these can keep you on track on your way to home ownership,
while losing sight of any of them can delay or derail you on your path to buying your
- Pay down existing debt, starting with debt with higher interest rates
- Ideally, pay off your credit card balances each month, rather than carrying a balance.
- If you do carry a balance, be sure to pay more than the minimum monthly payment.
- Don’t carry a debt balance that is more than 30 percent of the total amount of credit/debt you have access to.
- Pay on time. Don’t miss any payments, as any missing or late payments show up on your credit report and can lower your credit score.
- Save to boost your down payment fund, cover any unexpected expenses, and help pay down your debt
- Don’t make any big changes when it comes to career, purchases, etc. that impact your financial paper trail or overall financial health. Don’t incur new debt, don’t open or close new credit accounts, and don’t move money around.
Of course, the better your credit, the higher your credit score, the easier it is to get a loan, and the better the terms of the loan are likely to be. The lower your credit score, the higher the interest rate you will have to pay; and you may need a larger down payment.
Check Your Credit
You are entitled, by law, to one free copy of your credit report every 12 months from each of the three major credit reporting companies. Visit AnnualCreditReport.com to order access to yours. You can also call 1-877-322-8228.
You will need your name, address, social security number, and date of birth. You do not need to pay or provide a credit card number. You should schedule some time –perhaps a half hour –to go through the process. Be sure to print or save each report for reference as you access it. The reports will give you guidance on where you stand, and may reveal some errors or inaccuracies that need to be corrected. You can do that using the process outlined by each of the credit reporting agencies.
It can be worth the trouble –25% of reports have errors, and 5% have errors that may lead to a higher rate on loans, or even lead to you being denied a loan.This is the only federally authorized website to access your free credit reports. Other sites may ask for a credit card number and offer free reports and a free trial period for whatever service they offer, but if you don’t cancel, some will then charge you a monthly fee.
One resource to consider is a non-profit credit counseling service. There are a few to choose from in the greater Tampa area, including GreenPath Financial Wellness. There are also credit repair companies and debt consolidation services in the marketplace, but be sure to educate yourself and choose wisely. In some cases, a service will renegotiate your debt for you, which can help you, but that can also hurt your credit. Many will help you assess your situation and offer advice that you can then act on, whether or not you sign up for their services