Noticias

Do’s and Don’ts While Under Contract

Do understand what affects your credit score.

There are 5 components to your credit score:

Payment history (35%): late payments hurt your credit score, while on-time and early payments help it.

Amount of debt (30%): while your credit is what’s available for you to borrow, you shouldn’t be using all of your available credit. Having high balances on your credit cards will negatively affect your score. In fact, Experian recommends keeping your debt under 6% of your total credit available.

Credit history length (15%): the longer your credit history, the better.

Amount of new credit (10%): if you open too many credit accounts within a short period of time, you present a greater risk to lenders.

Credit mix (10%): your credit mix should be diverse. It should consist of revolving accounts, bank-issued credit card accounts, and installment loans, including mortgages.

Don’t buy that car.

Taking on any new debt (not just a car) can hurt your credit score, which in turn can affect the process of closing on your home. Debt obligations can be seen as negative, especially when they are non-essential. If you’re in the process of buying a new home, it’s best to refrain from increasing your debt.

Do keep in touch with your sales agent.

Although your agent should be regularly in contact with you, you should too. Let them know of any questions, worries, or news you might have regarding the purchase of your home so things can run smoothly the day of closing.

Don’t open new credit lines.

Unless it’s absolutely necessary, refrain from opening new accounts. This can impact your credit score negatively depending on the rest of your history, and it’s better to be safe than sorry.

Do save up for a deposit and put it ASIDE!

In the midst of the whole homebuying process, it can be easy to forget to save up for your own payment once you’ve been approved. Open a savings account for your deposit and don’t access it until it’s time.

Don’t quit!

Not everyone loves their job, but everyone needs their job. Lenders and banks need to know you have a source of income to pay off your mortgage, so if you have the urge to say buh-bye to your boss, stay strong and push through! Unemployment could easily lead to the contract falling through.

For information regarding building a better credit report, visit https://www.consumer.ftc.gov/blog/2014/06/building-better-credit-report-20

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