Wednesday, June 13, 2012

Cleaning up your credit before buying in Millburn-Short Hills, NJ

One of the very first steps in home buying is cleaning up your credit.  Without good credit, you won't qualify for a good loan.  Without a good loan, you might not be able to buy the house of your dreams.  Cleaning up your credit before finding the home you want to buy is the way to go.  That way you can figure out an accurate budget and there won't be any last-minute surprises or obstacles when closing on a home.  Here on tips on cleaning up your credit before buying a home in Millburn-Short Hills, NJ:

Order a credit report and correct any mistakes
Everyone is entitled to free credit reports from the three major credit agencies on an annual basis.  Click here to request yours.  Once you've received the reports, comb them for any inaccuracies.  Even something small such as an old credit limit on a card can affect your score.  Remember, you may also request to have anything over seven years old removed from your report.  That includes late fees, cards you've closed, and accounts that went to collections.

Pay off anything in collections
Having something in collections hurts your credit score big time.  Pay off any outstanding debts you have immediately.  Call and try to negotiate paying a lower price if you pay immediately, in full.  Sometimes creditors will remove the debt for half of its worth if they are worried they won't get any payment otherwise.  Shortly after paying off outstanding debts, obtain your credit reports again and make sure they have been updated.

Ask for an increased credit limit
An increased credit limit will give you a better debt-to-credit ratio and that is taken into consideration when developing your credit score.  Basically, you want to have much more credit available to you than what you are currently using.  Call current credit card companies and ask for an increased limit.  Don't put more debt on the credit card, however, because then your ratio will stay the same!

Practice good habits now
If your credit history has some blemishes that you can't remove yet because they aren't over seven years old, just relax and do the best you can now.  Pay all of your overdue accounts and bring them up to date so they are current as soon as possible.  From now on, make sure to pay every bill on time.  A credit history that has some rocky parts, but shows improvement in recent months can still be used to obtain a loan.

Hopefully these tips will help you clean up your credit score so you can get the mortgage and the Millburn-Short Hills, NJ house that you want!  If you have any questions whatsoever about local real estate or the community, please do not hesitate to contact me.

Elaine Pruzon
Coldwell Banker Residential Brokerage
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