9 Common Sense Ways to Repair and Build Your Credit

One’s ability to afford to purchase property is directly linked to their credit. Having good credit is a must for securing car loans, home loans, home improvement loans, and other personal loans. Below are 8 practical ways to repair and build your credit.

1. Pay Bills on Time. This is common sense. Not only will you show you are serious about meeting your financial obligations, you are preventing yourself from accumulating late fees.

Spread too thin? Look for common sense ways to save cash such as avoiding Starbucks or limiting how often you eat out. Also, if you have medical bills to pay, be sure to get set up on a payment plan paying the smallest amount possible—such as $25—interest free. Medical institutions are very willing to work with you. And maintaining a balance that you are faithfully working on paying off does not affect your credit score!

2. Make an Extra Payment, if possible, or Pay More than the Minimum. Make this a standard rule to live by regarding anything that charges interest. Making more than the minimum payment reduces the amount of time until the loan or credit card is paid off—even if it’s only $5 more than your amount due. Have some extra cash one month? Use it to make an extra payment which positively impacts your pay off date even more.

3. Increase Your Limits on Credit Cards, but Don’t Use It! Increasing your limits reduces the debt/credit availability ratio making your debt look less serious than it is on paper. But, don’t fool yourself and begin to making unnecessary purchases racking up more debt. The purpose is to help your credit score not give you more power to spend.

4. Position Your Purchases. If you do have to make a purchase using a credit card while trying to repair your debt, use a card that has a lower balance and more credit. Some people insist on using one credit card for all of their purchases rather than spreading out their purchases. This creates a high debit to credit ratio which will be flagged by the credit bureau.

5. Limit Inquiries into Your Credit. Nearly every business these days offers discount incentives for opening a credit card associated with their company. But, every time you apply for new credit, an inquiry is placed on your credit report. Too many inquiries will negatively affect your score. If you are trying to repair or build credit, the additional savings associated with opening a new credit card will not pay off in the long run.

6. Fix Errors on Your Credit. You have the ability to get a free credit report once a year from the credit bureau. Don’t assume that the credit bureau is always correct. If you’re trying to repair credit, make sure you do your due diligence and check your report for errors. Then call and get those errors fixed.

7. Consolidate Debt Using Low Interest Loans. If you’ve gotten in so much debt that you can’t see a way out, there are some great loan companies that can help you consolidate debt with a personal loan. Companies such as SoFi® can help consumers with low interest loans at reasonable terms to help you reduce your debt quickly.

8. Keep Accounts Open After They are Paid Off. You might think it makes sense to close credit card accounts after you get them paid off. However, this can actually negatively impact your credit score. A credit report reveals the full history of you having accounts. If you close accounts that have been open for a long time even after they’re paid off, you’ll reduce your credit history, which lower your scores. Instead, use this opportunity to begin good spending habits and charge only what you are absolutely sure you can pay off each month. Charging a nominal amount—even just $25—will keep your account active and demonstrate your ability to handle credit responsibly, positively affecting your credit score. A win-win for both you and the credit bureau!

9. If you’d like to know of additional things free on your own without paying someone, press sign me up and we can either contact you or help you through how to do it. If you would like a free consultation, call me today, Shawn Custis 513-683-7283.

6 Common Mortgage Mistakes Made By Buyers

In a world where everything is accessible with a simple Google search and a push of a button, buyers are inclined, more than ever, to forego mortgage professionals and attempt to secure a loan on their own. But doing so involves great risks and can result in some unfortunate outcomes. Word to the wise…be aware of mistakes that are commonly made and avoid them!

Here are 6 common mistakes that are made by potential home buyers:

1. Failing to get pre-approved for a home loan. The key to getting a good mortgage is preparation. Many people think a simple pre-qualification is enough to secure a good loan; but, in reality, it lacks depth. Based only on basic values such as income and credit scores, it doesn’t tell the whole story. A pre-approval, conversely, looks at those things and more.
Speaking to a live person who also examines your assets and employment can help determine your debt-to- income ratio supplying you with an exact amount of what you can afford. Additionally, a written commitment from a lender show’s sellers just how serious you are about purchasing a home.

2. Chasing “Too Good to Be True” loans. There are many online loan programs that sound too good to be true. These loans are typically interest only loans with super loan payments, negative amortization loans where the principal increases rather than decreases, or short-term balloon loans where you’re required to pay off in a short amount of time. A local mortgage lender is aware of such scams and can keep you making a mistake that will cost you in the end.

3. Failing to check your credit. Before you commit to buying a house, you should check your credit score. A low credit score can increase your mortgage interest rate significantly. If you’re serious about purchasing a home and your credit score is low, spend a few months repairing it to increase your score before you resume shopping for a home. It will benefit you in the long run!

4. Failing to look at the whole picture. When looking for a home, it’s easy to look at the selling price and not consider the final dollar amount you’ll be paying to make the purchase. In addition to the cost of the house, a mortgage loan also includes taxes, interest, and insurance. Many of the online calculators available to determine your monthly payment do not include these items. It’s wise to contact a local mortgage broker who will take these into consideration and give you a more accurate picture of what you’ll be paying for a home.

5. Failing to season your assets. Lenders like to see that you have money coming in to your bank account on a regular schedule. Often, people will hold on to money and make deposits in large sums. Avoid hiding your money under the mattress at all costs…it won’t work for you.

6. Failing to show steady employment. Similar to #5, lenders want to see you have steady employment and income and that it is expected to continue for the foreseeable future. Sudden career changes right before you apply for a loan will be a red flag to most lenders. If a career change is in your future, wait until you’ve closed on your mortgage to make the big move.

Following these 6 simple suggestions will help you secure a loan that is right for you. If you would like assistance, call Shawn Custis of Columbia Financial Services, Inc. at 513-683- 7283. There is absolutely no cost for speaking with him…and you’ll have peace of mind.