Five Tips for Raising Your Credit Score

Five Tips for Raising Your Credit Score

Your credit score is the best way a bank can tell if you are worthy of a loan or credit. There are several things you can do to maintain a decent and respectable credit score.

Your credit score is one of the most important numbers attached to your identity. In some cases, it is even more important than your social security number. Unfortunately, many people have a low credit score because of late payments, too much debt, or simply because of inaccurate information on their credit reports. Here are five tips you can use to raise your credit score for better mortgage rates and a better chance of getting approved for loans.

1.       Check for Inaccuracies
One of the quickest ways to boost up your credit score quickly is to scrutinize your credit reports and look for inaccuracies. There are three main credit reporting bureaus – TransUnion, Experian and Equifax – and they often have different information. Get a copy of all three and go through each of them a couple times a year them to see if there are negative marks that don't belong there. If you see something that doesn't belong, contact the bureau immediately and have any inaccuracies removed.

2.       Avoid Late Payments
Late payments can bring down a credit score quickly and significantly. In fact, your payment history accounts for about 35 percent of your overall credit score. That's fairly significant! Making your payments on time is also the best and quickest way to begin building up your credit again if you have damaged it. Information about late payments can stay on your credit report for up to seven years, but a track record of 12 months of on-time payments can increase your score with noticeable results.

3.       Reduce Your Debt Ratio
If you can pay off some of your debt, you can raise your credit score significantly. This is especially true if your credit cards are near the "maxed out" limits. Ideally, you should keep about 60 percent of your available credit free on each card. If this means spreading your debt among several cards, then do it. The amount of outstanding debt accounts for about 30 percent of your credit score.

4.       Keep Old Accounts Open
Part of your credit score is based on the average length of time that you have had open accounts. As a result, keeping your older accounts open increases that average and boosts your credit score in the short run. The length of time that you have had credit accounts for about 15 percent of your score. If you want better mortgage rates and higher approval rates for credit, don't close those old accounts unless it is absolutely necessary.

5.       Plan Ahead
When applying for credit or loans, the lenders will undoubtedly check your credit score. Unfortunately, this can ding your score if it happens too often. When considering a mortgage or some other type of loan, do your research before applying with different companies. If you have to apply with more than one company, try to complete your applications within the same month. For purposes of auto loans and mortgages, inquiries are only counted as one if they are all done within the same 45-day time period.

 

Five Ways to Save Money for Your Down Payment

Five Ways to Save Money for Your Down Payment

Waiting for the best mortgage rates before buying a home can be a good idea. But how can you be ready with that down payment when the mortgage rates are at a low?

Saving money for a down payment is often an obstacle for many first time home buyers. In fact, it may be such a stumbling block that many people just forget about buying their own home because they cannot come up with a decent down payment. There are some everyday things, however, that you can do to save money and put it towards a new home. Follow these tips to get your down payment started right away!

Quit Using Paper Towels
Paper towels can eat away at your grocery bill and cost up to $10 per month depending on how sparingly you use them. In a year, you would be spending $120 just on paper towels that get thrown away. Instead of using these, use old rags and towels to do the job that paper towels used to do. If you simply cannot do without paper towels, at least hang them over your sink's faucet so they can dry and you can use them again. It puts more money in your pocket and helps the environment at the same time.

Use Online Publications
If you added up the amount of money you spend on magazines and newspapers in a year, you may be surprised. Even if you only buy a newspaper every day at 50 cents each, that's still over $180 a year ... and that's not counting the Sunday paper! You can get all of the same information if the paper has an online edition. Many magazines also have online publications with all of the same articles and information. As a bonus, it's not taking up space in your office or house when you use online editions and you can easily save just the parts that are of interest to you.

Rent Instead of Buy
I'm talking about DVDs, of course. Most people buy DVDs of movies when they first come out and they watch the DVD one time and it goes on their shelf to collect dust. If you buy an average of four DVDs a month, that's almost $1,000 per year you could be spending on something that you will only use once and end up selling in the future for a fraction of what you paid. Instead, use Netflix or some other service and save a ton of money that you can put towards your down payment.

Turn in Your Change
If you're like most people, you have containers of change sitting around your house. Take some time each year to count that change and put it into your savings account to put towards your home's down payment. You may be surprised how much you have just laying around.

Turn Off Your Heater
Instead of turning your heater up in the winter to feel warm, take it down a few degrees and put a couple extra layers of clothing on or bundle up with a cozy blanket. You could save $50 or more a year by simply dropping it down a couple degrees and you won't even notice the difference in temperature.

Of course, just using one of these tips or a couple of them won't help you put together a sizeable down payment. But using many tips together and making some lifestyle changes will add up over time and you can jump into buying your home when the mortgage rates are at a low. We'll have more money-saving tips for you in future posts!

Four Ways to Pay Off Your Mortgage Sooner

Four Ways to Pay Off Your Mortgage Sooner

Paying off your mortgage sooner than scheduled is an ideal way to lift a financial burden off of your shoulders. Just be sure to do it the right way!

Paying off your mortgage sooner than scheduled is one way to save thousands of dollars over the life of the loan. But it is also a great way to save you a ton of stress of a house payment hanging over your head as you get older. With some careful planning and thought, you can pay off your home mortgage in the smartest and most financially-savvy way possible.

1. Make Biweekly Payments

One of the best ways to pay off your mortgage faster without spending more money is by making a payment every two weeks instead of every month. Cut your monthly payment in half and pay one half ever other week. Although you are paying the same amount each month, you are stopping the interest from accruing as much as if you just send in your payment once a month. Also, you are paying 13 payments each year instead of the normal 12 if you pay biweekly.

Example: If you have a $100,000 mortgage scheduled for 30 years with a 7 percent interest rate, you could pay off the loan six years sooner and save almost $35,000 by using the biweekly payment method.

2. Make Lump Sum Payment with Bonus Money

If your mortgage agreement allows you to make large periodic payments, apply any large amounts of money you get to your mortgage. This can include Christmas bonuses, inheritances, lottery winnings, tax refunds or any other large sum of money. Depending on how much extra money you apply to your mortgage, you could save thousands in the long run.

3. Refinance with a Lower Interest Rate

If your credit is better than when you bought your home and if interest rates are low, consider refinancing your home. When you get a lower interest rate, you won't be paying as much in total over the life of the mortgage. If your financial situation allows it, opt for a shorter term mortgage rather than a 30-year one. You may need to pay a little more each month, but you will save thousands in interest and be rid of your house payment many years sooner.

4. Send More Money Each Month

If you have had your mortgage for several years, there is a good chance that you make more money now than you did when you signed the papers. Take some extra money each month from your paycheck and apply it to your mortgage. Even if it is only $50 or $100, sending this extra money in every month will ensure that your mortgage gets paid off sooner than you think!

Many people in America desire to be debt-free. A mortgage is typically the largest debt that a person or a household has. As a result, it may be a daunting bill that seems like it will never be paid off. Use the tips above to own your home outright while saving money, too!