Mortgage and Real Estate Frequently Asked Questions
- What can I do to improve my credit?
- Where should I live?
What can I do to improve my credit?
- The best way to improve credit scores is to obtain a copy of your credit report, available to consumers free once per calendar year due to the Fair Credit Reporting Act. Scrutinize your credit report and check the accuracy of each account listed on each of the three credit bureau's reports. Be sure to check all open and closed accounts, and compare the reports. TransUnion, Experian and Equifax may not all have the same information. Contact the credit bureaus directly if you suspect fraudulent activity on your credit (i.e. identity theft, credit applications not made by you, etc.) by calling their fraud alert 800 number found on your credit reports. If there are errors with any of your accounts, contact the bank or lender to correct the problems. They in turn will notify the credit bureau's of the changes made and that will increase your credit score in due time.
- Credit bureau's track how many inquiries you have in a certain time frame. For example, if you apply for a credit card, buy a house and lease a car you will have three inquiries into your credit. If you have too many inquiries on your credit, scores can go down dramatically. Avoid unnecessary hits on your credit to decrease this penalty and keep your scores high.
- Credit bureau's also look at the percentage of credit that is being used. For example, if you have a credit card with a ten thousand dollar limit and you have a balance of nine thousand five hundred that will look much worse than if you have a balance of, say, three thousand. They also look at how much credit you could potentially max out. An example of this is if you have four different credit cards each with a credit line of five thousand dollars, a credit bureau thinks that at any time you could have twenty thousand dollars on credit, even if you never carry a balance month to month. This potential debt is a risk according to credit bureaus. Only have open enough credit to cover your needs. You can call your credit card companies and request that they decrease your credit line, and close any accounts that you do not need.
- Always make on time payments to your creditors, even if you can only afford the minimum payment. It is better to pay on time and slowly pay off debt than to miss payments and risk having your accounts turned over to a collection agency which may lead to bankruptcy or foreclosure. If you do have consumer debt on multiple credit cards or home equity lines of credit it is best to pay it off as quickly as possible, making as large of extra payments to the smallest balance as possible until that one is paid off, close that account and apply the same payments to the next balance until each line of credit is paid in full. This can help you avoid penalties, finance charges and increased interest rates that all contribute to a lower credit score.
- Live within your means and do not try to "keep up with the Jones's" if you cannot afford to. If you pay off your debts, limit the number of inquiries you have on your credit, decrease your available credit to just what you need, close unnecessary accounts and correct errors on your credit report, you will find your credit scores increasing dramatically, and your credit options opening up.
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Where should I live?
- Obviously the answer to this question is dictated by where you work, where your family and friends live, if you are willing to relocate, whether or not you have school-age children who would be affected by a move to a new area, amenities you enjoy or require, the type of environment you want to live in, etc.
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