Credit Score Improvement Tips for Livermore Home Buyers!

Livermore Credit TipsIf you are planning to buy a home in Livermore, Pleasanton or Dublin, your foremost concern could be qualifying for a mortgage. And for good reason! Mortgage underwriting has become notoriously picky. Loan denials happen to applicants who would have been deemed very creditworthy just a few years ago.

One of the top causes of a mortgage loan denial is an insufficient credit score. Even if your credit score meets loan approval, you may be surprised to find that it isn’t lofty enough to qualify for the most attractive interest rate.

Fortunately, there are ways you can improve your credit score! It takes diligence and patience. Here are some tips from FICO and consumer advocates:

1. Pay all your bills on time, including cell phone bills, cable TV service, and utilities. You don’t know who is actively reporting to the credit bureaus and who isn’t, until you have a report in hand. By then, the damage is done!

2. Reducing your debt load helps your score, but shuffling debt around does not. Avoid making frequent balance transfers to take advantage of introductory credit card rates. This can cause you to open more lines of credit than necessary, and it may backfire eventually.

3. Don’t run your credit cards up to the limit, not even during the holidays. Using more than half of your available credit can hurt your score. Some credit counselors say that you should not use more than one-third of your available balance.

4. The age of your credit accounts can impact your score. The more seasoned your accounts are, the better. Consistent credit relationships and good, consistent payment habits are key.

5. Applying for too much credit can hurt your score. If you are shopping for interest rates, multiple credit inquiries that occur in a very short time – such as within the same day – are not generally harmful. However, multiple inquires on your credit report can cost you points. For this reason, it’s suggested that you shop only 3 different lenders, instead of 5 or more.

6. The number of accounts and the type of credit also can impact your score. A mix of credit, such as a credit card and a car loan, show that you can handle various types of debts and treat them with equal priority. This is a smaller percentage of the scoring model, so don’t feel pressured to run out and open new accounts you don’t need.

7. Don’t close old accounts in good standing, even if you are not using them. Closed accounts are pervceived as a negative event, whether or not they were closed by the creditor or the consumer.

Also, don’t ignore medical bills. Years ago, when mortgage underwriting was easier, medical collections were not a deal-breaker. But a single collection account on your credit report can drag down your score. It’s far better to make payment arrangements with the clinic than to deal with a collection company.

Please remember that these are basic guidelines. FICO does not share the scoring progams they use, just like Google won’t tell you how their search rankings work. Also, there is no overnight cure for damaged credit. Any company that promises you a magic wand to “fix” your credit just wants your money. Paying your debts on time, and paying down high balances, are the bread and butter of credit improvement.

When you have questions about buying a Livermore home, let me help! I will refer you to trustworthy, reputable mortgage lenders who can help you pre-qualifiy for a mortgage. I will also help you find the ideal home for your needs and budget!

Please feel welcome to contact me for expert home buying guidance!

John Kurtzer
Your Livermore Real Estate Expert
RE/MAX Accord

Livermore Real Estate
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