3 Credit Enhancing Tips Your Clients Don't Know About!
Our goal for our partners and their clients is to help educate on the home buying process while making it an easier process.
One way to make sure that your home buying process runs smoothly and you have the best chances of getting the home of your dreams, is to have good credit!
The best way to ensure that you’ll qualify for the quality of house you imagine in your mind is to set yourself up for success and strategize on how to position yourself as the ideal buyer for a seller to choose!
If you have poor credit or just want to increase it, we suggest spending about 6 months to a year working on the necessary steps in order to see a positive change in your credit.
Here are three credit enhancing tips that will help you qualify for the home you want.
- Pay More Than the Minimum
Many people will only pay the minimum payment amount each month, even though there were purchases made throughout the month. But, this is actually a risky thing to do.
The balance at the end of every month will accrue interest, so if you are only paying the minimum payment, each month your interest will increase as your balance increases.
Paying more than the monthly minimum will get your head above water if you aren’t able to pay off the entire balance in a timely manner. Ensuring the interest doesn’t increase your debt, is crucial!
- Take Out a Small Personal Loan
Are you thinking about doing a small home remodeling project? Or will you be making a large purchase and already have the cash for it?
Personal loans have better interest rates than credit cards, and if you take out a loan that you can quickly pay back, you’ll get a nice little credit boost.
Another tactic would be to take out a personal loan if you have a few credit cards open and are currently paying a monthly payment towards each one.
By taking out a personal loan that can pay each one of those credit cards off, proceeding to add those balances all to one place and having one payment, you’ll do three things:
1. Make your life easier with bills
2. Save money by getting a lower interest rate
3. Lower your credit utilization ratio
- Set Up Bill Pay on a Credit Card
This may sound counterintuitive, but hear us out.
These bills should already be built into your monthly budget. By setting up an autopay on an existing credit card that does not have a high usage on it, you can kill two birds with one stone.
You’ll be paying your bills, and managing your “debt” responsibly, which is what debtors like to see.
Once your credit card has been charged for those bills, pay off that amount immediately.
Because you won’t be maintaining a high balance on your credit card since you’ll be paying off the debt quickly, your credit will slowly increase.
Typically credit cards harm credit scores when someone has allowed their credit card amount to increase so much that they are unable to pay off the amount in a timely manner. This ultimately makes their debt amount increase due to interest and takes much longer to pay off.
eHome America prepares and educates individuals about financial literacy and money management.
If you’re looking for a good resource on how to manage your money well, see how our course can help!