Credit, Bad – Debt-Free, Good
If you’ve read any of my previous blog posts about credit, you know that I’m not a fan of people getting all kinds of different credit. I am a firm believer that being debt-free is an amazing way to live. You never have to worry about where your money needs to go, how much you need to make to pay all those various bills, or worry about what will happen if something happens like a job loss or a medical diagnosis.
You may also know that I am now a REALTOR®. I want to help people learn about that process so they can get into a home that they can afford without stressing about the increasing costs of ownership.
My Friend Paul
As a REALTOR®, a trusting and honest relationship is established. If you are a seller, I represent you in any negotiations once a Listing Agreement is signed. If you are a buyer, I represent you in any negotiations once a Buyer’s Representation Agreement is signed. Without an agreement, you are on your own when it comes to navigating the contract paperwork and any negotiations.
We’ve had several conversations about clients who need help getting a loan. One reason a contract will fall through is an issue with credit. That’s why it is so important to start working on your credit immediately, preferably six months before you want to purchase a home.
Paul has provided an article on how to improve your credit when preparing to purchase a home.
Although I can appreciate having a variety of credit avenues open to show credit worthiness, sometimes, that is not a good thing for people.
If you have a habit of keeping a balance on your credit cards, then maybe a better way would be to keep one credit card and maintain control of your spending.
I was divorced in 2002 after an almost 15-year marriage. After six years, I managed to pay off my debts and only kept one credit card. Over time, I had several car loans for various lengths of time and maintained a zero balance on my credit card. With a credit score over 800, I had no problems qualifying for a loan for a house.
Everyone needs to decide their own path when it comes to finding a great home. If you choose wisely, your credit can help you achieve the goals you want. However, if you neglect what is happening with your credit, it may prevent you from getting that house.
Here’s a brief list of things that can trip you up when trying to purchase a home.
- Missed payments on loans.
- Late payments on credit cards
- Late utility payments
- Too much debt-to-income ratio. If you owe more than about 36% of your income towards bills, you may not qualify for a loan.
There are also ways people can sabotage the loan process.
During the contract period, you start to purchase items for your home:
- Riding mower
- Washer and dryer
Once you are under a contract, do not make any changes that could affect your credit or your debt-to-income ratio. You’ll have time to purchase those items after you move into your new home.
Reach out to me so we can work together to make sure any credit issues are addressed before trying to purchase a home. Visit my business website for contact information.
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