5 Tips for Establishing Credit

3911844_m

If you dream of one-day owning your own home, you’ll most likely need to finance its purchase. Mortgage lenders will want to review your credit history to evaluate whether or not you’re a worthy borrower. So how do you get started establishing a credit history? Here are four ideas for you to get you started:

Open a bank account
Open a bank account and use it responsibly. This is the first step in establishing a financial history.

Get a co-signer
A good way to establish credit is to piggy-back on someone who already has good credit history established and is willing to co-sign, but be aware that any default of credit on your part affects the credit of the co-signer.

Secured Credit Card
Apply for a credit card. Shop around and only apply for a card if you can meet the lender’s requirements. Responsible use will help you build a good credit history. Pay all your bills by their respective due dates and always pay over the minimum amount due.

Use Your Credit Cards
Your credit score is highly based upon the ratio of debt to you incur to your total credit line and your ability to pay that debt on time so using your credit cards will establish examples of this. Try to keep the ratios low by paying your debt down every month. And NEVER EVER close a credit card, even if you don’t use it. It will count towards your total credit line.

Department store and gasoline credit cards
Since gasoline credit cards are not revolving (cannot carry a balance forward month-to-month), often they are easier to obtain than regular credit cards. Similarly, some department stores offer revolving credit for a specific purchase and this is easier to obtain. It is also a good way to establish credit.

If you’d like to chat more about steps you can take now that will help make your dream of homeownership a reality, I’d be happy to offer my expert advice. Just give me a call.

Advertisements

5 Steps to Prepare for Your New Home Purchase

ImageWhen making the decision to purchase your first (or second, or third) home, its always a good idea to prepare so you can set realistic expectations to avoid frustration and wasted time. Check out this article which highlights the “Five Steps to Prepare for the Home-Buying Process.”

The steps include:

1) Check Your Credit Score

2) Figure out a Real Budget

3) Get Pre-Approved for a Mortgage

4) Determine if Homeownership Makes Sense

5) Set Realistic Expectations

$26 billion Foreclosure Settlement Could Mean Relief for Underwater Homeowners

If you are underwater on your home or were foreclosed upon between 2008 and 2011 there could be some relief coming your way according to an article from CNNMoney today. Federal and state officials have agreed to a $26 billion settlement of potential state charges of home seizures made without required paperwork and improper foreclosure practices based on robosigning by the five largest lenders in the country – Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Ally Financial.

About $17 billion will be used to reduce the principal for underwater homeowners and could mean a reduction for as many as 1 million people. While this is a start, the average reduction would be about $17,000, so might not go a long way in assisting those upside down on their mortgages. In addition, about 750,000 homeowners who are current on their mortgages will be able to refinance their loans to take advantage of the current record-low interest rates. About $1.5 billion will also go to homeowners foreclosed upon between 2008 and 2011 and who meet other criteria. They will be eligible to receive $2,000 for charges of robosigning.

Negotiations are underway to expand the current settlement to nine other servicers, potentially expanding the settlement to $30 billion.

It is important to note that even though a homeowner may accept settlement from the bank, it does not inhibit their ability to file criminal prosecution charges against the bank.