Mortgage Tips: Building Strong Credit

Use the 2-2-2 rule!

2 trade/credit lines (i.e. credit card, line of credit, car loan, student loan, mortgage etc.)

2 years of activity/utilization

$2,000 (min) limit with 30%-50% balance paid in FULL every month

 

Have a discrepancy on your bill?

Pay the bill then fight the creditor. I've seen people not pay the bill out of spite, then have it sent to collections--this only hurts you.

 

If you're not using an old credit card, cancel it.

 

Don't miss payments, especially mortgage payments as they hold the highest "weight" in the credit algorithm.

 

Someone with an 850 credit score with only a $100 cell phone bill does not show strong borrowing ability to repay loans.

 

You need to show creditors you can borrow money and repay it on time.