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Credit
scores, along with your overall income and debt, are a big factor in
determining if you'll qualify for a loan and what loan terms you'll be
able to qualify for.
1.
Check for and correct errors in your credit report. Mistakes happen, and
you could be paying for someone else's poor financial management.
2. Pay down credit card bills.
If possible, pay off the entire balance every month. However, transferring
credit card debt from one card to another could lower your
score.
3. Don't charge your
credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to
apply for a mortgage. You're penalized less for problems after a
year.
5. Don't order items for
your new home you'll buy on credit—such as appliances—until after the loan
is approved. The amounts will add to your debt.
6. Don't open new credit card accounts before
applying for a mortgage. Having too much available credit can lower your
score.
7. Shop for mortgage
rates all at once. Too many credit applications can lower your score, but
multiple inquiries from the same type of lender are counted as one inquiry
if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the
loan on time, the interest is high and it will probably be considered a
sign of poor credit management.
This information is copyrighted by the Fannie Mae
Foundation and is used with permission of the Fannie Mae Foundation. To
obtain a complete copy of the publication, Knowing and Understanding Your
Credit, visit http://www.homebuyingguide.org
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