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Good Credit -- Essential for the Prospective Home Buyer
Credit is a funny thing. It can be a useful tool in the hands
of an informed individual, or a weight of burden to the
unsuspecting. One thing is for certain, you must have a decent
credit score to attain a quality mortgage loan.
We speak to hundreds of individuals each month that are in the
market to buy property. Unfortunately, many of them have less
than desirable credit scores, and because of this, are not able
to get prequalified for a loan.
There are numerous reasons for bad credit scores:
bankruptcies, late payments, large credit balances, and a host of
others. There are many legitimate reasons a person may have bad
credit, but frankly, most of the people we talk to have simply
made poor financial decisions.
In most cases, bad credit can be easily avoided:
1. On revolving credit card balances, make sure you pay your
minimum balance each month. You will even receive a slight credit
boost if you pay over your minimum amount, so do it if you
can.
2. Avoid "maxing" out credit card accounts. Credit cards are
good to have to build your credit, but make sure you keep your
spending under control. Preferably, you should be able to pay off
any CC balances completely in the same month you spent the
money.
3. If you need to make any big purchases, avoid the temptation
to place the entire purchase on your credit card. Instead, put
money aside each month until you have enough for the purchase.
Remember, just because you have a big spending limit on your
cards, doesn't make it your money! You have to pay every penny
back plus interest!
4. Try to think of a credit card as a tool for building credit
as opposed to a tool for buying the things you want. You spend a
small amount each month, and pay it off immediately. This will
spike your credit score, and keep you out of CC debt.
5. Make sure to pull your credit rating at least twice a year.
This will give you a good feel for what your score is, and most
credit score reporting services will give you a detailed
explanation for why your score is where it is. If you find any
errors, make sure you report and resolve them immediately. It can
be long and gruesome work to get a negative mark removed from
your credit record, but it can be well worth it when it comes
time to buy a house.
I hope some of these tips will be helpful for you as you try
to be a good steward of your finances.
You may also want to check out these free resources:
www.FamilyCredit.org
www.DebtFreeChristian.org
Justin Smith is the President of the Christian Real Estate
Network - http://www.HisMove.com
MORE RESOURCES:
Credit - Google News
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