Banks use credit scores and reports to help them make a decision about you. They will look at your credit score itself, and at your credit report. They want to see how much debt you have, how many credit cards you have open, how many loans you have, and how well you repay your debts. In short, they want to know how much risk they would take on by lending you money. The following steps will help improve your credit and in the lenders eye reduce the risk associated with lending you money to buy a condo or loft.
Make sure you pay your bills on time. Generally, payments made 30 days after the due date start affecting your credit score. If you let them go longer, they will hurt your score even more. So make sure to make your payments on time, even if it is just the minimum payment on your credit card. If you have fallen behind on a payment, do what you can to bring the account current, including calling the creditor. You might be surprised how willing they are to work with you.
Reduce your debt. Paying down your credit cards or loans is easier said than done, but necessary if you want to improve your credit. Try to find money in your budget to do it. If you cannot, consider taking on a part-time job anything to throw a little extra money at your debts. Some people advise you to pay down debt with the highest interest first. Others say to pay off your smallest debts first, which may give you momentum. Do whatever works best for you, though you likely will save money on interest by paying off high-interest cards first.
Do not open new credit cards, or close ones you have paid off. Opening a new one even if it is to take advantage of a no-interest balance transfer offer, for example could actually ding your score. And banks look at the total amount of credit you are using compared with how much you have, so keeping unused cards open means you are using less of your available credit.
Check your credit report. You can get free copies of your credit report from Equifax, Experian and TransUnion, which are the three major credit reporting agencies, once each year. Look carefully over the report to make sure it is accurate. If there are inaccuracies, call the company and get them changed. If that is the case, you may be able to raise your score without too much pain.
If your credit score is low, or your credit report shows some things you are not proud of, do not despair. Things happen. Just make sure you get them fixed or are on the path to getting them fixed before you get too attached to a certain condo or loft.
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