Guide to Credit
A homebuyer’s credit rating can play an important role in the buying process. A person’s creditworthiness may affect the amount one can borrow, the interest rates and even the ability to obtain a mortgage loan in the first place.
In order to help customers build good credit and increase their ability to obtain better loan terms, Vanderbilt Mortgage and Finance, Inc., is offering these tips for improving credit.
Pay bills on time
Late or missed payments on any credit accounts such as credit cards, mortgages and other loans could result in a drop in credit score. Making payments on time, making additional payments whenever possible and paying extra to principal will also help to keep a good payment history and decrease the payoff timeline. Using an Extra Principal Payment Calculator tool can help calculate the savings that come with paying extra.
Paying statement balances in full instead of letting debt accumulate can improve credit scores, which can result in being offered better terms from lenders. Lenders often check a borrower’s credit report when they apply for a loan and measure the amount of debt they’re carrying against the loan amount they’ve requested. Excessive debt is one of the factors that could cause a lender to decline the application.
Avoid applying for unnecessary credit
Credit applications can appear as inquiries on credit reports, which suggest to lenders that an applicant may be taking on additional debt. Be aware of sales that offer purchase discounts if you apply for a credit card. These could show up as inquiries on your credit report. These inquiries remain on credit reports for two years. Instead of applying for additional credit, use existing lines of credit to prove responsible credit management by paying bills on time and paying off debt quickly.
Check out the full Guide to Credit for more helpful tips to manage credit.