If you are in the market for a home and you already know your credit history is good, you might be surprised by some of the tips loan officer, Tomi Fratto of Mason McDuffie Mortgage Corporation in Reno, NV shares with her potential borrowers when managing credit is the topic of discussion.
- Stay current on your existing accounts.
- Continue to use your credit card as usual; you don’t want to raise red flags by changing your spending habits.
- Contact your loan officer before you make any address or credit changes that might affect your score.
- Don’t apply for new credit including co-signing for a loan. Every time a potential creditor pulls your credit, there is a potential you can lose points on your credit score.
- Don’t pay off collections or charge-offs. The key to paying off old accounts when you are in the process of obtaining a mortgage is to pay it off through escrow. Then you can request a letter of deletion from the creditor.
- Don’t close credit card accounts. If you close an account, it may appear your debt vs income has gone up. It will also affect your credit history.
- Don’t max out or over charge on your credit cards. If you can, keep your balances 30% below their limit during the loan process.
- Don’t consolidate your debt. Consolidation will give the appearance that you have maxed out your credit.
If you have bad credit now, for any reason, but want to know how to improve your credit, the tips listed above are a good place to start.