Learn How To Take Care Of Your Credit Before Buying Your Home
Popular Mortgage guides you to get a good score. Thinking about buying a property? There is no doubt that buying a home can be an exciting experience. However, before starting the process, it's important to have healthy finances and to know your credit score. In essence, credit is a numerical representation of your financial behavior.
Having a good credit score could improve your financing possibilities in terms of cost, interest rates, and transaction costs. "Credit score is a numerical representation based on the analysis of an individual's credit behavior. It's used in banking as one of the elements that helps evaluate the capacity of repaying a loan," explained Irene González Monge, vice-president and manager of Credit and Business Intelligence. Below, we tell you how to keep a good credit score before buying a home.
Review Your Credit
Before applying for a mortgage, you can find out your credit with the help of free apps and web sites. If you have a low score, these apps have tools that indicate the possible reasons and strategies to improve it. Credit can reveal how you manage your finances, but other factors could affect this number. For example, the maturity or age of your credit can impact your score. The longer you have been building credit, the higher your chances of raising your score. It shows the bank how long you have been meeting your financial obligations.
Make Payments on Time
Paying your debts in a timely manner is one of the most influential factors on your credit score. If your credit is built on credit cards, student loans, personal loans, or auto loans, it's important you make payments according to the schedule you agreed on with the banking institution.
Don't Overdo Credit Usage
Once you decide you want to buy a home, you should be careful with the use of money and credit. It is advisable to keep credit usage low. A good benchmark is to keep your credit usage below 30% of your total available credit. You will save money on interest payments and avoid going over your credit limit.
Avoid Frequent Credit Inquiries
While it is important to have several credit sources, you should avoid regular credit inquiries. Requesting multiple lines of credit within a six-month period is not advisable. Also, once you begin the mortgage application process, it's important to avoid acquiring new debts which could affect the evaluation.
Raising Your Score Is Possible
If your credit score turns out to be low, you may ask yourself how you can raise it. Though it can take time, you can improve the score by organizing your finances and paying your debts on time. "The most important advice [I can give] is that, if your credit score is low, you can always raise it. A credit score is alive, and it changes. It will require time and discipline, but it can be done," stated González Monge.
The Popular Mortgage team guides and prepares you to fulfill your dream of buying a home. For more information, go to www.popular.com/en/mortgages, call 787-707-7070, or visit any of our mortgage centers located around the island.