We are seeing more and more buyers and sellers frustrated as mortgage companies refuse loans based on bad or even low credit. This devastates buyers who see their dream of buying a home and participating in the American Dream smashed. Sellers who have not asked if the buyer is qualified either through ignorance as a for sale by owner, or using an agent who is not experienced enough to ask for mortgage approval and financials are also affected as their home has been off the market and may have missed a qualified buyer in that time.
This bad credit can be for a variety of reasons, not least having your identy stolen, which it is important to protect, divorce, health issues but much of it is ignorance at what makes up your credit score. Making payments punctually, the ratio of your credit card debt to your credit limits, years of credit experience, type of credit on record and recent searches of credit record and the number of accounts recently applied for all affect your credit score to differing degrees.
Some simple ways to improve your credit rating, over time, is to pay all bills on time, all the time; do not use all of your available credit, and pay off your debt, don't move it from card to card. While this will help your score to go up, it won't happen overnight, so be prepared to make changes well ahead of when you want to buy a home.
Also mortgage companies are starting to insist that buyers have a down payment towards their future home, so start saving. however much you can save begin with that. I once read that if you begin to save you will start to save more as you see it grow, you add little bits to it. Make some cuts in your budget, skip that caffee late and put the money in a savings account, put your loose change into a bowl or bottle and when you get a cash back offer on a purchase put it in your savings. Pay yourself first each month and live off the remainder of what you earn. Start with maybe 5% of your earnings and put it in a savings account on an automatic payment schedule, before you know it you will have a fairly large sum and may even feel comfortable increasing your savings amount to 7.5 or even 10% and living off the rest.
So, remember if your plan is to buy a home, protect your credit, make those payments on time, pay off your debt, and start saving.
If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you, contact us or connect
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