HOME BUYING CREDIT

ATTN: HOMEBUYERS
Consider your Credit

Credit is one of the most powerful words on earth. It dictates just about every financial aspect in our life. Scores range from 300 to 850 with 850 representing the highest FICO score. Credit payment history dictates your score and your score dictates your credit worthiness in which dictates the over health of your credit and finances. It is extremely important when buying a house, that you have checked off your credit check list, making sure that everything is current and in good standing with your creditors. Your monthly payments should be made on time every month. This establishes payment history which is viewed by banks when determining certain factors pertaining to your loan type and interest rates. Generally the following factors are considered with FICO credit ratings: Payment History makes up about 35% , Amounts Owed = 30% of your score, Length of Credit History = 15% of your score, New Credit = 10% of your score and Types of credit used equals 10% of your score. Fair Isaac Corporation ( FICO), uses the credit scores to measure the likeliness that you will pay all debts as agreed. The same works with if you have a lower score, which indicates that you will most likely not repay your debt. Major Credit Reporting agencies like Equifax, Trans Union, and Experian, all gather information pertaining to your credit history and then provide a score based on your history. It is extremely important that you understand your credit in addition to the factors that affect your score, so that you will be able to maintain or improve your credit status.



Here are a couple of tips that may help you either improve or maintain your credit:

• Pay your bills on time. Remember that this payment history factor contributes to 35% of your over all score. It is crucial that you maintain at least minimum balances on your revolving debts, which will ultimately make the biggest impact on your credit. Remember, credit is very important and can have either a positive or negative affect on Home Buying.

• In all cost please try to avoid late payments. However, if you find your credit contains a few late fess, then you may contact the creditor to request them to be removed. If that does not work due to financial difficulties that you may have gone thru and as a result you know have negative reporting information, then try to resume making payments as soon as possible. This will avoid additional fess and balances accumulated. Remember, the amounts owed makes up the second biggest contribution to your score in the form of Amounts Owed, which makes up 30% of your FICO score. Remember, credit is very important and can have either a positive or negative affect on Home Buying. Avoid maxing out your credit cards, and paying down installment loans, this fact is important regarding your debt to income ratios.

• It is recommended that you do not close any accounts that are current. If you are no longer using them then don’t. However, if you keep them open it will contribute to your credit score in the area of Length Of Credit History, which makes up 15% of your credit score. Even though that are open accounts, it is still considered to be good because of the contribution that it makes to your Lenth of Credit history. This is very important to lenders if you are trying to get a home loan.

• Try to keep your revolving credit at a minimal, to include department store cards and credit cards. This will help your score in the area of New Credit Accounts, which makes up 10% of your FICO score. This is important because when you are in the market to purchase a home, it is important that you do not have any items that may be considered to impact your ability to repay the home loan. Remember to always use New Credit Accounts wisely and keep in mind your debt ratios. If at all possible, when you are in the market to purchase a home, avoid opening up accounts all together.

• Another factor would be Types of credit Used, which makes up 10% of your score. Remember, the type of credit that you obtain will impact your score.



Note: Bankruptcies affect your credit for 7 – 10 years. Please remember to use your credit wisely and responsibly. If you are purchasing a home in the Washington DC and need financing, I can help. Click on the link below to get pre-approved for your new home purchase.





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