We can’t stress enough how important it is to have good credit. Good credit will provide you with freedom and more choices throughout your lifetime. It will give you better interest rates on car loans, a variety of credit cards to pick from, the best mortgage rates out there and many other things. So how exactly do you establish good credit?
- Don’t miss a payment: This is very important as every time you miss a payment your credit score will decrease. Bills that are reported to your credit bureau can include: cell phones, student loans, credit cards, car loans, lines of credit.
- Keep your credit card balance at less than 30% owing: It’s best if you can pay of your credit card balance at the end of every month. However, if that’s a bit of a stretch at least try to keep the balance owing at no more than 30% of the total value of the card. This will help your credit score to move up.
- Have a minimum of two trade lines: When it comes to arranging a mortgage, lenders will look to see that you have two trade lines (ie: credit card and car loan) for a minimum of two years. This shows the lender that you have practiced good money sense.
- Keep the number of credit checks to a minimum: Every time you sign up for any sort of loan or cell phone the company will do a credit check. When the company does that credit check it will lower your credit score. It is acceptable for individuals to have their credit checked every once in a while however what they are trying to prevent are “credit seekers” – please looking for credit everywhere they go.
- Check your own credit: When you pull your own credit through Equifax or Trans Union it won’t hurt your credit rating. It’s smart to check your credit bureau at least once a year to make sure everything is being reported correctly. It also gives you a chance to fix any credit errors you might have.
- Keep your credit maximum low: The bank may continuously offer to increase your credit but you need to think, “Do I really need my credit availability to be that high?” You can protect yourself from a huge balance by keeping your credit availability at a minimum.
We want to work with you from the beginning to the end. This means even if you are just out of high school come see us. We can discuss different ways to save for your down payment, how to protect your credit and much more. Has your credit been tarnished already? That’s okay, we can help you start to repair your credit and get you to the point of purchasing a home. Let us help you!