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.

Need Help Building or Improving Your Credit Score?

Call Cornerstone Today for More Information at (800) 965-9910

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.