Nowadays, the subject of financing and the sad housing and real estate market is in everybody’s favorite topic. Thus, firms involved in financing or mortgaging have shifted to overly conservative stand. In fact, the move to foreclose has taken a faster clip in most U.S. states that the president himself had to come and intervene with some financial assistance.
With this prevailing climate in home loans and with credit firms scrutinizing every applicant for a loan. One has to do some homework to find out how to avoid pitfalls in the process of applying for a home loan.
If you are interested in borrowing money from a bank you must maintain a good credit record, otherwise you cannot even get to second base in the application.
For, before banks lend you the money the normal approach is for creditors wanting to determine how much of a risk you individually are. In other words, what is the likelihood that you would be able to repay the money they would loan you?
There is where credit scores can help them do that. So the higher your credit score is, the less risk the bankers would feel that you'll be. Increases to ones credit scores usually develop over time and therefore requires a positive and continual effort on your part. Most credit scoring entities look at five areas in a person’s credit reports.
They examine and analyze your kind of payment History which includes how much money you owe, the length of your history on record, and the types of credit you have used. Examine and see how you can improve the credit score in your record and chart a plan of action to improve them. Now here are steps into improving your payment history:
- Religiously pay your bills on the exact due date. A record of delayed payments do play a vital part in driving ones score down.
- If for some reason you have bills that are now past due, make every effort to get current and maintain to stay that way.
- Be judicious in contacting your creditors the moment you realize that you are going to have a problem in paying your bills on due date, and then try to work out a payment plan and discuss with them the possibility of keeping at least a part of the late notices away from your credit reports.
- Should you find your situation to be serious, seek the help of a credit counselor?
- Stay away from shady deals and scams who will promise a quick change of your credit situations.
- Always make sure to keep you debt to a low level.
- Also make sure to keep your credit card balances low. Remember that the ratio of high debt-to-credit-limit will drive down your scores.
- Always try to pay off debt and avoid “moving it around”
- Avoid closing unused accounts, because a zero balance can help your score.
- Make sure you do not open accounts that you don't need just to try a quickie approach to changing the ratio of your debt-to-credit-limit.