Life is unpredictable. From illness to divorce to job loss, many factors can take a toll on your income that can leave you struggling to pay your monthly mortgage payments on time. If you have lost your job and are unable to make your monthly mortgage payments, job loss mortgage insurance can help cover those […]
Building Good Credit for Your First KC Home Loan
In a previous blog, we discussed how many Millennials are having trouble obtaining their first KC home loan simply due to a lack of credit. Before jumping right into the credit game, it’s important to keep these tips in mind:
- Don’t open too many lines of credit
- Keep your credit card utilization rate between 1% and 30%
- Check your credit report for errors
Getting Credit Cards
Many credit card companies will offer you “deals” that make getting a card easy. However, it’s important to do your research and know your financial limits. Keep in mind that credit cards are not supplemental income, ergo getting more cards does not mean you have more money to spend. A higher number of cards does mean that it’s easier to accumulate debt.
While it’s essential to have a credit card in order to build your credit score, you have to manage that credit responsibly in order to prove you are not a risky KC home loan candidate. Therefore, be sure to ask yourself “Do I really need another credit card” before you sign up for one.
Using Your Credit Card
The whole point of getting a credit card is to use it, but depending on how much you use it and how quickly you pay back your credit. Your credit utilization rate, or the percentage of available credit you use on a daily basis is a major determining factor in your overall credit score. A healthy credit utilization rate is between 1% and 30%.
Disputing Credit Report Errors
Of course, lenders use your credit report to calculate your credit score, which determines whether or not they approve you for a loan. However, mistakes happen, even on credit reports. Even seemingly small mistakes on your credit report can negatively impact your score, so be sure to check your report and dispute errors before applying for your first KC home loan.