“Oh my god! My credit is so bad. I could never buy a house!”
Every day we come across people asking us how to improve their credit scores so they can purchase their New Orleans home. While some of our tips take longer than others – it’s all great information to have!
Credit Score Tip #1: Keep credit card balances low
Ideally, you would have all of your credit card balances at, or below, 30% of the limit. We know that can be a challenge for some. Strive for at least 50% to keep your score from dipping too much.
Credit Score Tip #2: Don’t have late payments
Set an alarm on your phone. Set up auto-draft. Do whatever you have to do to make sure you pay all your bills on time! Especially that student loan!
We have seen a payment that was only a few days late take a hit on an otherwise great credit score.
Credit Score Tip #3: Pay medical bills
It’s a big misconception that medical bills don’t show up on your credit report. They most definitely do – when they get to collections. Work with the hospitals to get on payment plans before they send it to collections. This will absolutely lower your credit score.
Credit Score Tip #4: Quit applying for credit
Every time you have your credit run, it can ding your credit score. For an even bigger hit on your score, have a car dealership run it. Dealerships run it through so many systems that you will typically take anywhere from a 20-50 point hit.
You don’t need a credit card for Old Navy, Dillard’s, and Pier 1. If you apply for lots of credit and then try to get qualified to purchase a home, it can reflect negatively on your credit score.
Don’t co-sign for people either.
Credit Score Tip #5: Don’t Close Accounts
Closing old accounts can affect your credit history. Just cut up the card and don’t use it!
Credit Score Tip #6: Don’t Pay off “Charge-offs” or Collections
It seems crazy, right? If you want to pay off old accounts, do it through escrow. Request a “letter of deletion” from the creditor. If they can’t, or won’t provide it, then speak with your loan officer first.
If you have been harassed by debt collectors, they may have broken the law and can be held accountable.
Credit Score Tip #7: Say no to Debt Consolidation
Yes, you put all of it on one card so the interest rate was lower. This actually negatively impacts your credit as it appears that you are “maxed out” on a credit card.
Credit Score Tip #8: Call a loan officer
Call a local loan officer for a credit check so they can give you an accurate score rather than a consumer-based score that is available online.
Why? Because that credit score from Credit Karma is likely about 40 points higher than what your true score is.
If you see your score going up though, it likely is heading in the right direction. But to get a true picture, a lender needs to pull your credit.
If you’re worried about a credit score hit when they pull your credit – it doesn’t. You can have 3 different lenders pull your credit in a matter of ten days without a hit on your score.
If you need more tips on how to improve your credit score, tell your lender. They can do a credit scenario and find the best ways to raise your credit score.
But, I saw my credit score was 640!
Websites like Credit Karma do not give you your actual score. They are typically off by about 40 points – and not in the right direction. If you see your score is 640, then it’s likely a 600. If you see your score going up though, that is likely true. With a great local New Orleans lender, we can determine if it’s time to run your credit again.
Can I buy a New Orleans home with a lower credit score?
Sure! But lower credit scores mean higher interest rates. Higher interest rates mean you have less buying power. Let’s find out what your real credit score is so we can start shopping for your home in New Orleans! As your New Orleans real estate agent, we want to set you up for success!
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