Written by Morteza (Morty) Sadeghi
When you’re ready to take the plunge and get involved with some manner of real estate to call your own, you’ve more than likely done some of the research that’s needed so you’ll know what’s expected when applying for a mortgage.
You understand you’ll need to demonstrate to lenders you don’t present an unusual risk by providing detailed information on your employment over the last several years and where you’ve lived over a similar timeframe.
While you’re keeping an eye on the mortgage rates forecast and getting ready to sign on the dotted line, it’s important to give your credit report the once-over to make sure that’s in good order well.
Now, while that part about the credit report is pretty obvious to most people who are looking to get a loan, there are a few hidden traps some people aren’t aware of that can negatively affect those numbers. For example:
Keep any credit card balances somewhere between 30 to 50% of their limits. Although technically you can spend right up to the limit on any of the cards, keeping below the limit is a good idea to show you’re both prudent and responsible with credit.
Remember too that while consolidating all of what you own onto one card might be a good move to see how much you owe, it’s a terrible idea for your credit score. Better the lenders see you’ve got several balances well below their limits than one that’s approaching it.
Finally, you need to keep in mind credit card activity is a real indicator of how you use credit to the lenders you’re applying to. That said, don’t cancel even the cards you rarely use. This could hurt your credit score by lowering the numbers on the available credit you have. Applying for a mortgage is a process and you need to be sure you start with the right information.
