GENERALLY, you need to manage your credit when buying a home. If you want a real estate loan at the best rate for your purchase price, you need to manage your credit scenario, and that means manage your credit cards. Below, you will find more specific detail on how to manage your credit cards to increase your credit score.
Before the specifics of credit card debt, here are the Ten Commandments When Applying for a Real Estate Loan:
1. Thou shalt not change jobs, quit your job or become self-employed.
2. Thou shalt not buy a car, truck, van or boat (you may have to live in it).
3. Thou shalt not use charge cards excessively or let your accounts fall behind.
4. Thou shalt not spend money you have set aside for closing.
5. Thou shalt not omit debts or liabilities from your application, for example, alimony, child support, IRS liens or open judgments.
6. Thou shalt not buy appliances for the new home until you actually own it.
7. Thou shalt not originate any inquiries into your credit.
8. Thou shalt not lie about residency or marriage status.
9. Thou shalt not co-sign a loan for anyone.
10. Thou shalt not make large deposits without first checking with your loan officer, i.e., if you have cash on hand instead of in your bank account.
I give this as a PDF to my clients and am happy to share the knowledge. Our clients are looking to buy a home in the Twentynine Palms, Yucca Valley, Temecula, Murrieta, and surrounding areas, but these rules apply across the country
The Right Way to Manage Your Credit Cards
While one in seven Americans has at least 10 credit cards, the average is four, according to a report from Experian. Usage on credit cards has dropped dramatically in the last two years as financially constrained consumers have reduced spending and begun paying off debt. The national average interest rate on credit cards as of November 2009 is 12.64%, which has declined 0.45% from six months earlier.
As a member of the Top 5 in Real Estate Network®, I know that mortgage-seeking clients are always asking for advice on how they can improve their credit profile, such as the number of credit cards they should have. According to the credit experts at ApprovalGuard.com, however, it’s not just the number of credit cards you have, but how you use and manage those cards.
Here are some critical tips for managing your credit cards in order to maximize your credit profile:
1.Use your credit cards regularly, but in small amounts, never exceeding 30% of your entire credit line. For example, if your card limit is $4,000, set a self-imposed limit to keep your balance at $1,200.
2.Even if you pay your bills on time, coming close to your full balance each month affects your credit score negatively. Regularly maxing out your card limit is a bad habit in the eyes of credit-rating firms. It’s better to spread your credit charges out over two or three cards, keeping each balance at or below 30% of your total credit line.
3.Don’t get rid of old cards even if they have higher interest rates than ones you may get on newer cards. Credit rating firms like to see a well-established history, so utilize your old cards every so often for small purchases.
4.On the flip side, avoid getting new cards, if possible. When you add a new credit card, your credit score will likely suffer a temporary drop until you have established a payment history with that card.
Well-managed credit cards will assist you in establishing a stronger credit profile and better credit scores that can potentially lead to lower interest rates and terms when applying for home loans. For more information on shoring up your credit profile, please e-mail me. Feel free to pass this important article along to your friends, colleagues and family. All of us can use some guidance in managing our credit in today’s economic environment.
Lisa Delzompo (951-704-4559)
"May your home always be too small ... to hold all your friends!"
CA Dept of Real Estate, Real Estate Broker License #01379811;
NMLS Identifer #331744
REAL ESTATE: www.SandToSeaProperties.com. Covering northern San Diego, Oceanside, Temecula, Murrieta, Riverside County and desert areas of Yucca Valley, Joshua Tree and Twentynine Palms, CA.
LOANS: PRW Lending, Inc. Call direct 951-704-4559, or email me at lisa(@)sand2sea.us
Information is deemed reliable but is not guaranteed. Information is general and may not address your particular situation. Do not rely solely on this or any information you find on the internet. You should consult relevant professionals directly about your real estate, financial, etc., situation.