Bump up your score

Borrowers can improve their scores in numerous ways. The more time a buyer has before a home purchase, the more he can do to improve his tally. Obviously, paying down debt and keeping payments on time will improve a score. Here are a few other dos and don’ts:

• If you have fallen behind on a debt, get current and stay current.
• If possible, put a year behind any credit mistakes. Some items are scored less harshly after a year has passed.
• Don’t close out unused credit accounts. Doing so may lead to two score-lowering effects: 1) Your debt-to-available-credit ratio will rise; 2) Your average length of credit history may decrease.
• Don’t open credit accounts simply to create a credit history. This may lower your score by decreasing the average age of your credit accounts.
• Don’t shift credit-card balances to a new card.
• Perform your loan shopping within a 14-day period. Inquiries for one type of loan performed within this time frame are considered one inquiry. Stretched out over time, these will be treated as separate inquiries and will lower your score.
• Hold off on furniture, appliance, car, and other large purchases until after you buy your home. Any balances owed on these items may drag down your credit score.
• Check your credit report once a year. This does not count as a credit inquiry if you order it directly from the credit bureau.
• Correct mistakes. You should get a report from all three major credit bureaus and look closely at them. Getting an error removed from your credit report sometimes take diligence and a month or more. Another reason to get reports from all three agencies: they may have different information on you. Not all lenders report to all three companies. Many mortgage companies request scores from all three bureaus and use the middle score.
• Over the long term, having a few credit cards, carrying low balances, and paying them on time will benefit your score more than not having credit cards at all.
• Some people can benefit from credit counseling; however, consumers should verify that a firm or counselor is reputable before proceeding.

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.