Improve Your Credit Score
One of the biggest factors in determining whether or not you qualify for a home loan is your credit score. In addition to your income history, the credit score plays a strong part in establishing your interest rate and the terms of the loan.
Get on the internet and order a copy of your credit report. Mistakes on the report are common and you should take the time to correct them as soon as possible.
Don't get caught up in 0% credit cards and switch your balances around constantly. Get a card, pay the balance every month if possible. If you can't pay the balance all at once, put extra effort into paying them down each month.
Don't ever max out the credit card. Some advisors suggest not going over 35% of your limit.
If you have credit problems, solve them as soon as possible and then the further down the road you get from the problem the less effect will have. But you have to get them corrected. If you have a major problem, it's suggested you wait a least a year before applying for a major loan.
Once you apply for a car or home loan...don't use your cards until after the loan has closed. Some people have been known to apply for a home loan and then go out and run up the credit cards in buying furniture for their new home and then find out later that they no longer quality for the new home. All dressed up with new furniture and no place to go.
When shopping for a car loan or a mortgage, try to do all the inquiring during a short period of time. Too many credit inquiries can lower your score normally, but if all your applications are for a home loan, for example, and done over a couple of weeks then it's considered one submission and you're not suppose to be pentalized.
Finance companies are to be avoided. The normally have high interest rates and ususally indicates you're in trouble with your credit.
For more information, get a copy of "Knowing and Understanding Your Credit" and visit http://homebuyingguide.org
RUTH BETHEM, ABR, CRS, GRI, Realtor®