Almost half of US Americans have credit scores that are not so great or even good and these consumers will not qualify for preferred interest rates when buying a home. Depending on the consumer's credit profile, the consumer may not qualify for the home loan at all. The biggest challenge to consumers is that many don't know exactly how their credit profile will affect their ability to buy a home or get preferred interest rates.
Here are some tips that may help you understand and improve your credit profile:
* The maximum amount of your monthly credit line for you to have the best credit profile impact should be 50%.
* The top contributing factor that makes a good credit score is your payment history.
* As soon as you pay off one of your high-interest credit cards, you should continue using it occasionally, but minimally.
* Remember that applying for credit cards just to receive a free gift will have an impact on your credit. So, be careful and sign up for credit cards that you really need.
* Rewards points on your credit card are usually a good deal when you carry no balance each month.
* To even have a credit score, you must have at least one creditor reporting some type of activity on your credit report for six months.
* Remember: banks and credit card companies do not think you are credit worthy by how many credit offers you receive in the mail.
* Credit scores are mainly used by lenders to predict how likely you are to repay your loan on time.
* Credit bureaus who manage your credit report and scores are just regular business corporations. So, when there's a glitch on your report, contact them to get it resolved. They are not government entities.
* Here's a little pop quiz for you to test your knowledge: If you were to pay 2% a month on your credit card, how long would it take you to pay off a $3,000 balance with an interest rate of 10%?
If you found that you really are confused about your credit profile, there's good news. It's not too late and, with proper guidance and understanding, you can begin to effectively manage your credit profile. By the way, the answer to the pop quiz is that it would take 18 years to pay off.
Realtor® Liz Miller ~ Lake Havasu City, Arizona Real Estate
Havasu....Your Lifestyle Awaits
Great post Liz! Thanks!
Liz, good post. I'm amazed at how important credit is to us all and how 50% of the people have below average credit! Most of us think that credit is free money and therein lies the problem!!
Liz, this is a great post! Can you imagine how long it would take to pay off that $3000 credit card bill if the interest rate was 18 or 20%? That's a great way to drive the point home!
Liz People regularly need reminders such as yours - well done Karen
Good post Liz. Wouldn't it be nice if people (not investors) just paid for their houses in cash and then we wouldn't have to worry about all this?
Liz most are clueless when it comes to this issue and make life long mistakes. Have a great weekend.