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House Hunting? Keep an Eagle Eye on Your Credit Score
As rates on 30-year fixed mortgages hover around 5 percent and frantic sellers continue to drop prices in hopes of luring potential buyers, it may finally be time to purchase that dream house. If your a first-time buyer that doesn't have to sell an old house before buying the new one, then you should really be excited.
We may not be at the absolute bottom of the downturn yet, but we're certainly very close. And if you can just qualify for a mortgage in this extremely tight lending environment, then you will be patting yourself on the back in five or ten years down the road.
Stricter underwriting standards mean most lenders will require a credit score above 720 to enjoy good rates and terms. Every extra point counts these days, so keep in mind that the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay your balance in full.
Your credit utilization counts for 30% of the credit score, and you can start losing points once you pass the 10% threshold. In order to improve your utilization ratio and secure those much needed extra points, consider reigning in your spending the month before you apply or use a debit card to make half your regular purchases.
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