8 Steps To Guard Your Credit
April 25, 2011
So you're contemplating the big decision to purchase a new home in Oklahoma City. Whether you're a current home owner looking to invest in a bigger place or a renter excited to enter the world of new home ownership, your credit history plays the biggest role in the home-buying process. That's why Kent Carter, president of Citywide Mortgage, Ideal Homes' participating lender, says the single most important thing prospective home buyers must do is guard their credit. What does "guarding your credit" mean? Kent explains with these eight steps:
- Get a free copy of your credit report at least once per year to check for inaccurate information. Protest any false data with all three credit bureaus.
- Always pay your bills on time. Late payments may stay on your credit report up to seven years.
- Use a minimum of two credit cards each month to generate activity on your credit report.
- Keep the balances on revolving debt to about 10 percent of your high credit limit. (Example: Don't exceed a $400 balance on a VISA card if your credit limit is $4,000). A high balance relative to a high credit limit is derogatory even if you pay on time.
- Do not totally pay off credit cards each month. Do NOT close accounts you no longer use as this will lower your FICO score.
- Do not pay off old collections unless required by a mortgage lender. Any activity (even positive) on old credit items makes them appear as new derogatory entries and lowers your score.
- If you have paid judgments or tax liens, make sure they are shown as "paid." Confirmation of satisfaction is often not officially filed at the court house and continues to show up on credit reports.