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Settling the Score

In real estate, as in sports, it's the score that counts!

Settling the score your credit score before making a big purchase is always a good idea, it is the vital piece of information that  lenders will use to determine whether or not to approve your mortgage, and decide how much to loan.  A good credit score is the key to a quick and hefty mortgage pre-approval.  The following six tips are great ways to keep your credit score in check, and ensure the number reflects your actual borrowing power.

Pay on time: The core rule is to meet your debt obligations on-time, every time. If you have had payment lapses in the past but your habits have improved, time is on your side.

Correct mistakes in your credit report: According to Realtor Mag, 25% of Americans have reported mistakes on their credit report. The sooner you become aware of any errors, the sooner they can be corrected.

Detach yourself from the "wrong vendors": Wracked with credit card debt? Do your best to get ahead of the curve to boost your score. Credit card companies are notorious for being less than selective in their loaning process. After all, they profit when your card carries a balance. Your credit score is less effected by loans taken from banks because they are more reputable and discerning in their selection process. If you have been drawn in by store credit card schemes, now is the time to pay off the balance, and be done with them for good.

Reduce balances on revolving credits to less than 50 percent of the maximums: Emergencies happen to the best of us, and sometimes we reach for a credit card to keep ourselves ahead of the game. However, it is essential that your average balance is less than half of your total line of credit. For example, if your Discover card has a $10,000 limit, make sure your usage is less than $5,000. A high utilization ratio is read as a sign of weakness and potential trouble, reducing your score.

Minimize the number of "hard inquiries": Hard inquiries are requests to a credit agency for your credit score from a credit grantor, insurance company or other entity to which you have applied and to which you have entrusted your Social Security number. "Soft inquiries" made by you or by firms looking to sell you something for which you have not applied don't require your permission and don't impact your credit score.

Pay off collection accounts: If your credit report shows a long lost hospital or dental bill, now is the time to clear those debts.  You will not be approved for a loan with a collection account on your record, so the sooner you pay it off and improve your score, the better.

 

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