Ho, ho, ho! Happy Holidays from the Continental Title Company team.
We recently spotted this article on steps to improving your credit score from Yahoo! and thought it would be a perfect message to close out the year. No matter how interest rates fluctuate, improving their credit score by just a handful of points can save your prospective buyers hundreds, or even thousands of dollars, over the life of a home loan. After all, the better the score, the better terms and interest rates available.
Here are three actions people can take right now to start boosting their credit score:
Stay up to date on payments.
Your payment history is the most influential factor for your credit score. Simply put, if lenders see that you’ve been consistent with your payments, they’ll be more confident you’ll handle future debts as well. So, encourage your buyers to set up for autopay or give themselves reminders for any monthly payments they need to make.
Avoid taking on any new debt.
Your credit utilization rate is the sum of all your outstanding balances divided by the sum of your credit limit. This is another factor that credit bureaus measure when determining your credit score. A good rule of thumb is for your buyers to try to maintain a utilization rate of 10% of their limit. This means avoiding taking on any new debt – additional credit cards, car loans, or others – while shopping for their home. (Not the easiest advice to give during the holidays, but an important reminder, nonetheless!)
Don’t close out old accounts right away
This might be a little-known and counterintuitive piece of advice, but one that might give your buyers an extra boost. If they’ve been fortunate enough to pay off any debts this past year – student loans or a credit card, for instance – they shouldn’t be in a rush to close off the account. Closing an account might actually lower their score because it lowers their maximum credit limit. Keep those accounts open – even with a $0 balance – and they’ll avoid raising their credit utilization rate.
While credit scores are not the end-all, be-all affordability factor for homebuyers, every little bit of savings counts. These three tips can help your prospects put themselves in the best possible position in today’s market. When you’re ready to start the closing process, your Continental Title team is prepared to provide easy, hassle-free closings through any one of our 17 locations. Contact us today!