5 Ways to Increase Your Credit Score


5 Ways to Increase Your Credit Score

 

When it comes to improving your credit history and score, time is your best friend. If you’re one of the many people who have encountered credit challenges, it’s possible to increase your score and be in good standing again after only a year. Below are some helpful tips to get you started:

 

Pay Your Bills on Time

While this may seem obvious, many people don’t realize late payments are one of the most common causes for a drop in their credit score. It’s important that at least the minimum payment is made in a timely matter. According to FICO, 96 percent of people with excellent credit scores (those over 800) pay their bills on time. Keep in mind that your payment history is 35 percent of your credit score and that setting up automatic payments for the minimum amounts owed ensures your bills are always on time.

 

Pay Down Credit Card Debt

Prepare a plan to reduce your total credit card debt and your overall utilization. For example, if you have a $1,000 credit limit on a card, ideally you should maintain a balance of less than $300 and make timely monthly payments on the balance that is above the required monthly minimum payment. Your credit card utilization rate is the second-biggest factor that makes up your credit score at 30 percent. If your credit score is low because of high balances, paying these down is one of the fastest ways to improve your credit score.

 

Have a minimum of two credit cards and use them every single month, advises Alex Parker, sales manager at Home Team MortgageEbby Halliday Realtors’ affiliated mortgage source. Maintain a balance-to-limit ratio of less than 30 percent (meaning no more than a $300 balance if you have a credit card with a $1,000 limit). Ideally just charge items and pay them off every month to avoid paying interest on a carried balance.

 

When creditors see that you’re actively using your credit cards but not carrying a high balance on those cards it will reflect very favorably on your credit rating. It shows them you’re using your available credit responsibly and not abusing it. In many cases, this is when you’ll see creditors increase your available balance. This could entice you into making a bigger purchase that you can’t immediately pay off. Avoid this if possible and the increased credit line will help improve your score.

 

Keep Track of Your Score

Since your credit can affect so many major purchases, it’s wise to make sure the information is correct. There are multiple websites that offer free credit reports. Once you have received your report, check it closely for errors. If you do spot an error, initiate a dispute in order to have it corrected or removed. Repairing incorrect information on your credit report can be a long and tedious process, but it’s well worth it.

 

Ask Your Credit Card Company to Raise Your Limit

Although it may seem counterproductive to helping your credit score, remember that utilization is a huge factor in your credit score. The lower your utilization rate, the higher your credit score will be. You can typically obtain a higher credit limit simply by calling your credit card company and requesting to raise the limit. The downside of a higher credit limit is the temptation to spend more. Thus, it’s important to remember to keep your balance of each of your revolving credit accounts below 30 percent of their credit limits.

 

Pay Your Bills with Strategy

If you have multiple cards open with debt attached, find your utilization ratio and pay off a higher amount to the account that has the higher ratio.

 

For instance:

Account 1: There is $5,000 available credit and you have used $2,000 of the available credit. Divide 2,000 by 5,000 (2,000/5,000) and it equals .4. Move that decimal over two spaces to the right and you have 40 percent of your total available credit being used.

 

Account 2: There is $2,000 available credit and you have utilized $400 of the available credit. (400/2000) = .2, or 20 percent of your total available credit being used.

 

As mentioned above, you should only use up to 30 percent of your available credit. In this instance, you would want to pay down Account 1 quicker than you would want Account 2 paid off since Account 1 has a higher percentage, over 30 percent being used. Pay the minimum amount required by your account issuer on Account 2 and put down more into paying down Account 1.

 

If it’s affordable, paying your credit card bills twice a month can also increase your credit score since the account issuers typically only report your history once a month. This lowers your next reported amount due and can help increase your score quicker.

 

Considering purchasing a home? Home Team Mortgage Company, Ebby Halliday’s affiliated mortgage company, has a track record of building long-lasting relationships by providing exceptional service with competitive rates. With an office in each Ebby Halliday branch, Home Team Mortgage loan officers offer the convenience of one-stop shopping, coupled with expertise to ensure peace of mind for borrowers and agents alike.

 

For all your mortgage questions and needs, contact Home Team Mortgage Company.

 

 

Loan Lingo Made Easy


 mortgage-cloud

 

Buying a home can be overwhelming, especially when you add in the loan lingo used by lenders and real estate agents, according to Alex Parker, sales manager at Home Team Mortgage – Ebby’s affiliated mortgage source. To help alleviate some of the confusion, below are some common terms frequently used in the mortgage process:

 

FHA Mortgage

FHA is a type of mortgage that offers lower down payments, lower credit and less income to qualify. These mortgages are government backed by the Federal Housing Administration.

 

VA Mortgage

VA mortgages are loans catered to qualified veterans, active-duty military personnel and reservists. These loans require no down payment and are guaranteed by the Department of Veteran Affairs.

 

Conventional Mortgage

Conventional mortgages are loans offering a wide range of options for borrowers. Some features may include monthly or single premium mortgage insurance, second liens, and higher loan amounts.

 

Fixed Rate Mortgage

This is a mortgage loan for which the interest rate is fixed for the life of the loan. The principal and interest payment does not vary. As with every loan, the escrowed portion of the payment may fluctuate up or down depending on the tax or homeowner’s insurance changes.

 

Adjustable Rate Mortgage (ARM)

This is a mortgage loan for which the interest rate may change annually, often after a set number of years. ARMs are tied to indexes which are used to determine changing rates to align with the current market. The principal and interest payment may vary up or down, along with the escrowed portion of the payment.

 

Annual Percentage Rate (APR)

The APR illustrates the annual cost of financing, including interest rate, fees and charges and is expressed as an annual interest rate. Because you may be paying loan discount points and other prepaid finance charges at closing, the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to the APR on other loan programs to give you a consistent means of comparing rates and programs.

 

Pre-Qualification

A process by which a lender assesses whether a borrower qualifies for a mortgage based on information provided by the customer. Typically, a prequalification is an informal review as a preemptive to pre-approval and full loan approval.

 

Pre-Approval

A process by which a lender verifies information including credit, income and asset information to assure the borrowers qualify for the mortgage. A pre-approval is much more powerful in negotiating as it provides peace of mind for buyers, sellers and agents.

 

To learn more about the mortgage process and to determine how much you qualify to borrow for a home purchase, contact Home Team Mortgage at 972-665-1900 or customerserviceyhtm@yhtm.com.

Mortgage Lingo Made Easy


 

mortgage cloud

Obtaining a mortgage can seem overwhelming, especially when you add in the loan lingo used by lenders and real estate agents. Don’t worry! We can help you decipher this alphabet soup.

 

The Ebby Halliday Companies includes Home Team Mortgage, an in-house mortgage source that will alleviate the confusion and get you on your way to homeownership — fast.

 

In the meantime, here are a few common terms you’ll want to get familiar with:

 

FHA Mortgage

FHA is a type of mortgage that offers lower down payments, lower credit and less income to qualify. These mortgages are government backed by the Federal Housing Administration.

 

VA Mortgage

VA mortgages are loans catered to qualified veterans, active-duty military personnel and reservists. These loans require no down payment and are guaranteed by the Department of Veteran Affairs.

 

Conventional Mortgage

Conventional mortgages are loans offering a wide range of options for borrowers. Some features may include monthly or single premium mortgage insurance, second liens, and higher loan amounts.

 

Fixed Rate Mortgage

This is a mortgage loan for which the interest rate is fixed for the life of the loan. The principal and interest payment does not vary. As with every loan, the escrowed portion of the payment may fluctuate up or down depending on the tax or homeowner’s insurance changes.

 

Adjustable Rate Mortgage (ARM)

This is a mortgage loan for which the interest rate may change annually, often after a set number of years. ARMs are tied to indexes which are used to determine changing rates to align with the current market. The principal and interest payment may vary up or down, along with the escrowed portion of the payment.

 

Annual Percentage Rate (APR)

The APR illustrates the annual cost of financing, including interest rate, fees and charges and is expressed as an annual interest rate. Because you may be paying loan discount points and other prepaid finance charges at closing, the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to the APR on other loan programs to give you a consistent means of comparing rates and programs.

 

Pre-Qualification

A process by which a lender assesses whether a borrower qualifies for a mortgage based on information provided by the customer. Typically, a prequalification is an informal review as a preemptive to pre-approval and full loan approval.

 

Pre-Approval

A process by which a lender verifies information including credit, income and asset information to assure the borrowers qualify for the mortgage. A pre-approval is much more powerful in negotiating as it provides peace of mind for buyers, sellers and agents.

 

To learn more about the mortgage process and to determine how much you qualify to borrow for a home purchase, contact the experts at Home Team Mortgage at 972-665-1900 or customerserviceyhtm@yhtm.com. Click here to visit Home Team Mortgage website.