If you’re preparing to purchase one of the new homes in Vancouver, you may have come across some suggestions that are actually myths when it comes to building credit, especially for first-time home buyers. If you’re thinking about starting strong and building a house from scratch with us, we want to always be straight and honest with you, and that includes busting some credit-building myths.
What is true is that you should have good credit. It proves to lenders that you can be trusted to pay back the money on time. Good credit helps you get a mortgage, but it also helps you get a low interest rate on your mortgage, meaning you have a lower monthly payment, and ultimately pay less for your home. While good credit is important, bad credit can be repaired and rebuilt, but this is where a lot of myths come into play.
For example, people will tell you that to improve your credit score, you need to use credit and lots of it! This is half true, half myth. While it does help to have some credit to show lenders that you can pay back bills on a regular, consistent basis, having too much of your income in credit can hurt you. As a general rule, you don’t want to use more than 30% of your credit line, 40% maximum.
Some may suggest that a few missed or late payments isn’t a big deal, but it can be. If you consistently pay late, you don’t look stable enough to take on an additional loan. On the other hand, always paying on time is much more attractive to lenders. Once again, it’s all about stability. Your best bet, if financially possible, is to set up a recurring payment, potentially higher than the minimum payment, so that you always pay on time.
It’s a great feeling to pay off a credit card, but especially if you’ve had this line of credit for a number of years, keep the card open, rather than closing it. Credit history is an important factor, so the amount of time you’ve had your credit accounts can make up to 15% of your score. Keep the card, use it occasionally, and pay it in full, just to keep things active.
If your spouse has great credit compared to yours, it isn’t going to have an impact on your credit score immediately. Their good score will be averaged in with yours, which can help, but your score will only improve over time as you pay off the mortgage and other bills on time.
There are all sorts of opinions on when and how often you should check your score. Some say check it frequently, others say check it once a year. If you’re not in the process of obtaining a loan, once a year is typically fine. If you are looking for a home lender check every three to six months before applying to a lender. It won’t hurt your score to check your credit through an official report from one of the primary reporting agencies. However, do avoid official loan applications – for a credit card, car, etc. – at least six months before you want to apply for this current loan. It’s generally recommended to avoid applying for an additional loan – and thus another credit check – at least six months before buying a home, if not up to two years, to ensure the best credit score is listed.
As a first-time buyer, buying one of the new homes in Vancouver can be a daunting task, but in the long run, especially with a new home, you have a final product that is going to be free of problems, fit your personal lifestyle and tastes, and likely be an excellent return on your investment. Contact us today to learn more about building a new home on one of our available lots and learning more about our preferred lenders.Tags: homebuilder in vancouver wa, new homes for sale vancouver wa, new homes vancouver wa
This post was written by Garrette Custom Homes