Why Your Credit Matters
A homebuyer’s credit rating plays 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.
If you are looking to get a loan for a manufactured home in the near future, you will want to make sure that you have the best credit score possible. Improving your credit score can be intimidating, but that is why we have come up with these quick tips on how to do it.
Tips for Improving Your Credit
Be aware of your credit score
Quarterly credit checks can help you to be aware of any issues that may be keeping your credit score from increasing. You can find your credit information through the three major credit bureaus. You can get a free copy of your credit report every 12 months from each credit reporting company at www.annualcreditreport.com.
Things to look for on your credit report could include:
- Accurate personal information
- Late payments you can prove were paid on-time
- Correct amounts owed on open credit accounts
- Credit inquires made by companies you do not recognize
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.
Open a checking or savings account
Opening a new checking or savings account may be a sign of financial stability. Depositing funds into your bank account can help build your financial stability and show your home loan specialist that you have funds available in addition to your income to cover expenses in case of an emergency.
Minimize outstanding debt and keep existing debt manageable
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 for credit.
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, such as a department store 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 demonstrate responsible credit management by paying bills on time and paying off debt quickly.
Get a secured credit card
A secured credit card, or a credit account with a determined line of credit, is a good way to begin building your credit. Your credit line is determined by the required security deposit used to obtain the card and is equal to the credit line. Credit card debt often has the most negative effect on a credit score because it is a consumer debt that is not tied directly to any assets. Having a determined line of credit can help you keep the amount of credit card debt you accumulate manageable.
Building your credit score is the first key to financial success when trying to obtain a manufactured home loan.