SMART CREDIT PRACTICES
Before You Buy a Home:
Be Smart with Your Credit Practices
Be sure to pay your bills on time.
Avoid late payments, as they stay on your credit report for seven years.
​
Be strategic with your credit balances.
People with the highest credit scores use less than 7% of their available credit. A smart practice is to make sure you use less than 30% of your limit on any card.
​
Request higher credit limits.
When your income increases or you've gained positive credit, you may be able to get a higher credit limit. Your credit score will improve when your credit limit goes up and your balance stays the same, lowering your overall credit utilization ratio.
​
Quickly dispute any credit report errors.
An error on one of your credit reports could reduce your overall credit score. Quickly disputing credit report errors can help you improve your credit score.
​
Immediately handle collections accounts.
If you have any credit accounts in collections, pay them off quickly and ask the creditor to report the pay-off to the credit reporting agencies.
​
Build or rebuild your credit using a secured credit card.
A secured credit card is backed by a cash deposit that acts as collateral for the card. Using a secured card is a smart way to build or rebuild your credit.
​
Get credit for your monthly bills, such as rent, utilities, phone and Internet services.
Get your monthly bill payments added to your credit report using a Rent Reporting Service such as Experian Boost™, a free service. By linking your bank accounts to your credit report, you can get credit for on-time payments to monthly bills, such as cable, Internet, streaming or mobile phone services.
​
Mix up your credit.
Beyond credit cards, get a personal loan and pay it off without any late payments.
What not to do before applying for a home loan and before your loan closes.
1. Don’t make any large purchases, such as buying a new car, furniture or appliances.
2. Don’t incur new debt of any kind.
3. Don’t max out your credit cards.
4. Don’t close any credit card accounts, even ones you don’t use.
5. Don’t forget to check your credit score and report. AnnualCreditReport.com is a free service that checks all three credit reporting agencies.
6. Don’t forget to work on credit report resolutions.
7. Don’t be late on any of your bills.
8. Don’t change jobs.
9. Don’t co-sign on any loans.
10. Don’t make big deposits without providing verification to your lender (such as a gift letter).
