Stop Making These Harmful Credit Mistakes Before You Apply For a Mortgage
If you’re thinking of buying a home, you likely know how important a strong credit score will be. Mortgage lenders use this all-important number as the key indicator of your financial health. In fact, a less-than-stellar credit score can make or break your ability to qualify for a mortgage and buy the home of your dreams. So, how do you keep your credit healthy? Start by avoiding the following these two very common – and very costly – credit mistakes.
Opening Credit Accounts at Stores
Your favorite store credit cards may offer fantastic perks, but having too many of these accounts can be tremendously harmful to your credit score. The higher the average age of your credit accounts, the higher your credit score. Opening new accounts lowers that average age, thereby hurting your credit. Remember to always work toward a long trend of positive credit history, and think twice before signing up for new credit accounts that may impact your credit health for years to come.
Paying Only the Minimum Monthly Payment
If you want to achieve and maintain an excellent credit score, look for ways to pay down high-interest debts as quickly as possible. Paying the minimum payment on your credit accounts each month may meet legal standards and keep your accounts in good standing from a technical standpoint, but this costly move also keeps debts on your account years longer than recommended. Work to pay more than your minimum payment each month, with a goal of doubling your payments when\ever feasible.
Using credit in some situations, but it’s important to be savvy about it. Protect your financial health – and your ability to qualify for a mortgage loan – by avoiding these common credit pitfalls.
Image via Flickr/cafecredit.com