When buying a Tucson home, you need to get your financing in order first. For that, you need a good FICO score. While it doesn't have to be excellent, there are perks to possessing a higher credit score. A higher score qualifies you for better interest rates. That translates to lower mortgage payments each month. If your credit is less than stellar, you may want to follow these credit score tips for the Tucson home buyer. Whip your credit into shape before you buy your next home.
Credit Score Tips for the Tucson Home Buyer
Pull Your Credit Report
First things first. At the top of my credit score tips list is pulling your credit report. This provides a real look at what lenders see. Visit AnnualCreditReport.com to request free copies of your report from TransUnion, Equifax, and Experian. Each report contains different information. Not all creditors inform all three agencies of your credit history. That's why credit scores can vary. Lenders look at all three scores but only use the middle one for your loan. For example, let's say TransUnion shows a score of 650. Equifax shows your score at 645. Meanwhile, Experian reveals a 675 score. Lenders throw out the top and bottom, leaving you with 650. A score of 675 puts you in the "good credit" category. However, 650 falls in the "fair credit" range. While that's enough to qualify for most mortgage loans, it could cost you more in interest.
Search your credit reports for errors. You'd be surprised how many contain inaccurate information. When you find an error, dispute it with the appropriate reporting agency. They each utilize different methods to dispute erroneous information. Click on any of the links below to be taken directly to the respective agency's dispute department:
While a perfect score of 850 would be ideal, 750 or above puts you in the rarified air of "excellent" credit. It opens the door to the best interest rates and most diverse loan choices. You'll even find that lenders fight for your business. Talk to your lender about which items on your credit report you should concentrate on taking care of in order to boost your score right now. Not all debt is created equal. They can tell you which accounts to take care of now and which ones can be set aside for a later time.
Credit Card Debt
Let's face it. Most of us have credit card debt. If paying it all off seems daunting, focus your efforts on paying each card down to half of their limit. After that, shoot for 25-30%. And don't cancel old credit accounts, especially if they're paid off. These affect your credit-to-debt ratio. For example, you have three credit cards: one with a $1500 limit, one with a $2000 limit, and one with a $500 limit. You carry a balance of $600 and $750 on the first two but the third is paid off. With all three cards, your debt-to-credit ratio is 33.8% ($1350 balance / $4000 combined limit). If you closed the smaller credit card, your debt-to-credit ratio increases to 38.6% (same $1350 balance but with a lower $3500 combined limit).
One of the best credit score tips I can offer the Tucson home buyer is to talk to your lender first. Your bank is the perfect place to start. Make an appointment with one of the loan specialists there to discuss what you need to do to put yourself in the best position for a mortgage loan. When you're ready to start looking for your next Tucson home, feel free to contact me.