When it comes to buying the home of your dreams, one of the biggest obstacles for so many buyers is the health of their credit. Your credit report can be the one massive roadblock that prevents you from living your own American dream in the home you’ve always wanted.
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This is one of the biggest reasons, so many people who apply for mortgages get denied. They’re overspending. If you cannot afford to buy something with the money in your bank account, then putting it on a credit card is the last thing you want to do. It doesn’t matter what it is, from a new stove, new kitchen remodel, to those shoes or new laptop you must have right now—if the money isn’t in your account to buy it, then forget it!
Piling up more debt on your credit cards will only lower your score and put you further and further away from actually being able to buy the home you’ve always wanted.
You may not realize how much paying your bills on time actually accounts into your credit score and credit report. But timely payments on your bills actually accounts for 35% of your credit score, which means that it actually has the most weight on your score. The more on-time payments, the more your score improves. Work to pay the entire amount due on the credit statement every month before it is due, or if you can’t, then be sure to make the minimum payment every time. Paying on time is the key to a better credit score.
One of the easiest ways to start improving your score is to ask your credit card company about getting a higher credit limit. Especially if you’ve been paying your card on time for 6-12 months, you’ll have a higher chance of getting approved for a credit limit increase. Having a higher credit limit helps with the factoring of your credit utilization. This is the percentage of available credit you use each month which factors toward 30% of your credit score. But beware! Getting approved for a higher credit limit isn’t an excuse to go out and spend more on your credit card every month.