Credit reports are maintained by three major credit bureaus (Experian, Equifax, and Transunion). Each uses varying techniques to calculate a numerical credit score that reflects your credit worthiness. The greater the score, the better your credit rating. Certain events can have a negative effect on your score and can potentially stop you from getting approved for a loan. Below are advice for future West Newbury MA home buyers on credit mistakes to stay away from before buying a home.
Credit Mistakes To Stay Away From Before Buying A Home
Delinquencies demonstrate poor credit behavior and subsequently reduce your ranking. The extent you are late (30, 60, or 90+ days) and the number of occurrences also play a role. Late payments remain on your credit report for many years.
Accounts In Collections
If you fail to make payments and a lender has given up on their own procedures to get anything from you, they may move your account to a collection company. The collection company notifies the credit bureaus. The information will stay on your credit profile even after you pay off the debt.
If a lender is unable to collect the complete amount that you owe to them, they may “charge-off” the remaining amount. This can therefore apply if you entirely fail to pay or if you negotiate a lower amount. Charge-offs remain on your credit report for seven years. New creditors will see this history and assess whether you will repeat this offense.
Bankruptcy, tax liens, judgments, foreclosures, and other similar events are recorded into public record and to credit bureaus. Regardless of whether you clear these items, the initial reporting stays on your credit report. Particular items remain for up to 10 years and others (such as liens) never disappear. Therefore, it is important to avoid letting credit issues get this far.
Advice For Future West Newbury MA Home Buyers
All of the credit mistakes to stay away from before buying a home provided in this blog make you a high-risk borrower and will either cause higher interest rates or completely prevent you from getting approved for loans. Demonstrate responsible behavior and it will save you time, money, and disappointment when it is time to buy real estate. These are the best advice for future West Newbury MA home buyers. Keep in mind that this includes only a few typical credit issues. Consult a credit professional for guidance on your particular credit standing.