By Ian Batra
Real estate is a booming business and has a promising future. One that has a huge potential for growth. Getting the loans and advanced loans is very easy and the process has been simplified, the potential home buyers have to keep an eye on their finances and credit. Having a bad credit can be sometimes very stressful and also, it could cost you more, but on the other side, it is not the end, there are some things that you can do to help yourself out and improve your credit score.
Credit reports are very important
Do not just sit awaiting the credit limits to go out of bounds. As a homeowner, there is need to be concerned with your credit balances. It is very important if you have to work on your credit, then there is need that you understand what you are working for.
Getting your credit reports will help you in determination of your credit score and if you want to improve your credit score, it is crucial that you get to start with your here, with your reports.
Always be concerned with your credit reports by getting copies of credit history for your home. That way, you will be able to keep everything at a constant pace and thus improving your credit for homeownership.
Steps to improving credit for homeownership
Here are some 5 general points that will help you in raising your credit score for homeownership. It is very important that you get to follow them well if you want to raise your score.
- Make sure to maintain a good credit mix
This is one of the things that you have to make sure you get right. As a homeowner, your loans have to be in good mix that is there should a pre-existing balance between the good loans and the bad loans.
In case you are wondering what the credit mix is all about, here is what you should understand. For the bad loans, these include the personal loans and the credit while the good loans involve the home loans and the business loans.
These two categories must be in good balance for your credit score to improve your homeownership credit score. If you are a spendthrift, then investing in home loans is a better decision, your credit mix will be healthier and at the same time, you will be building an asset.
- Clear your high interest loans and the small loans first
With no asset creation, the small loans can put a huge drain on your finances. However, to improve your credit for homeownership, it is rather a prudent decision to pay your home loans over long periods.
However, clearing the small loans first is a better decision far much better because these loans have a very high interest rates.
The home loans are better, their interest rate is lower compared to the personal and private loans. And given that home loans have an asset attached to them, it only means that these loans are better paying.
- Always pay your dues on time
This is an important factor to consider for all those who want to raise their credit for homeownership. Any due that is yet to be cleared or paid, it is best that you have all these dues cleared on time.
Also, always make an effort to clear these home dues in full. A lot of homeowners out there get this wrong, they never want to pay their dues in time and when forced to the neck, they will pay halfway. This is a malpractice that will hurt your credit score for homeownership.
Let me surprise you, paying your dues in time and in full earn you 40 percent weight to your credit score. Otherwise, lacking to pay your dues in time will only compromise your score adding unnecessary interests and payment charges.
- Close the unwanted savings account
When your loan is finished, it is very imperative that you get to close down the savings account that are inactive. Many people tend to just let their saving account inactive once they finish their loans.
The effect of this is that all the savings account that are left with less than your Minimum Average Balance, they will start affecting your credit score negatively.
Basically, you do not want anything like this to happen to you, therefore, you should make sure that you close these accounts down. Make sure that you get your account or the loan closure certificate.
- Always keep your credit owed within its bounds
This is very imperative and very important for you to follow. Always keep your loans and your credit balances within the required limits. Exceeding your balances may negatively affect the credit score.
As opposed to most people’s thinking, a good ratio is not having your credit balance outstanding above 50%. if you want your homeownership credit to improve, you should try to make sure that your balance is halfway the credit limits. That way, you will be improving your credit on homeownership.
There are some instances where you are forced by circumstances to not pay in time. In such cases, you should make sure that you negotiate for your payments. What normally affects so many people’s credit score is the fact that they know that they cannot be able to pay their payments in time and choose to do nothing about it. Negotiating for your payments will increase your chances of raising your credit score.
It is very easy as a homeowner to improve your credit score. Improving your credit for homeownership is easy and actionable but as it is, so many people choose to do nothing about it. The above steps will help you in making sure that your credit score for homeownership is way above average. Again, for all those who are definite card spenders, it is best that you use two cards and this will help you in raising your credit for homeownership significantly.