Credit Tips

4 Steps to Improve Your Credit Score Before Buying a Home

When it comes to buying a home and securing a mortgage, bad credit can make it difficult to get a decent interest rate, which results in higher costs for you. Fortunately, there are some steps you can take to increase your credit score before applying for a mortgage. Improving your credit score by even 50 points can lead to significant savings in the long run. Read on for 4 simple steps to improve your credit standing.

Improving Your Credit

If your credit score is too low, you may not be able to qualify for a mortgage in the first place. Most mortgage lenders have a minimum that borrowers must meet to work with them, so borrowers with below-average credit stand to gain the most by improving their scores. Even good credit scores can stand to save thousands of dollars by taking these steps to improve their credit scores. Increasing your score helps you qualify for a mortgage and improve your mortgage rate.

Step 1: Dispute any errors on your credit report.

Get a copy of your credit report and scan it for inaccurate information such as duplicate credit accounts or identity errors like misspelled names. Duplicate credit accounts can make it appear as though you have more debt than you really do, which can all impact your overall credit score. You can dispute information like this by contacting the credit bureau in writing to outline any errors.

Step 2: Add your phone and utility bills to your credit report.

Different programs are available that enable you to add payment history from phone and utility bills to your credit report. If you don’t have much history and want to build credit quickly, this is one way to raise your score.

Step 3: Avoid late payments.

Your payment history is one of the biggest contributors to your credit score. Consider setting up automatic payments for credit card bills to avoid late payments, which can significantly reduce your credit.

Step 4: Keep your credit utilization ratio low.

Another big player in your credit score is credit usage. It’s recommended to keep the amount of credit used at 30% of your total credit line. So if your credit line is $1,000, try to keep your credit utilization at $300 or less. 

Credit Scores Matter

As you know, credit scores affect your mortgage rate. Lenders look for several personal financial factors when determining a borrower’s qualification. Protecting your credit can help prevent identity theft, but when it comes to quickly raising your credit score in preparation for the home buying process, there are actionable steps you can take to save yourself some money in the long run.

The Best Step You Can Take

We understand that buying a home can be stressful, but with the help of your team at Chris Doering Mortgage, we simplify the process for you, helping guide you each step of the way with our professional knowledge and expertise. Whether you are buying your first home or a vacation home, you should be well informed about the impacts of your credit score on the process as well as ways to improve credit before applying. Contact us today to get started. 

A Beginner’s Guide to Home Equity

Simply put, home equity is the interest a homeowner holds in their property based on the current market value minus what they owe on the home. A basic formula for home equity might look something like this:

Home Value – Owed Amount = Home Equity

Home equity should always be considered as an asset that can be used in the future, but also never taken for granted. Home equity doesn’t rise overnight either and should be treated as a long-term asset that slowly appreciates. However, home equity can also decrease. There are a couple of ways you can increase and decrease your home equity.

Ways to Increase Your Home Equity

  • A larger down payment: The general standard for down payments on a home is 20% of the value, but what if you put down more? Even a one or two percent difference can expand your home equity quicker.
  • Making loan payments: It might sound simple, but making continual payments on your home loan lien can bring up your home equity. As your owed amount decreases, your home equity increases. If you want to increase home equity at a greater rate, you can explore making extra payments or having a shorter-term to your loan to quickly gain home equity.
  • Home improvement: Whether it’s a big home improvement project like remodeling a kitchen, or a small project like replacing a window, home improvement projects can have a positive impact on home equity.
  • Give it time: Home equity can be years in the making and a key piece is the homeowner’s patience. Home values have gradually increased on average across the United States. This appreciation can be a great boost to your home value. For example, let’s say your home is valued at $350,000 when it’s first purchased and you owe a loan for $250,000 of it. If your home doubled in value to $700,000, your home equity would be over $450,000 and you wouldn’t owe any of that extra earned value to your loan.

Things that Decrease Your Home Equity

  • Low home condition: Repairs that a homeowner continues to put off could be damaging in the long run by hurting the home equity. A well-maintained home with continual updates will be rewarded while a run-down home’s equity will decrease.
  • Decline in neighborhood conditions: Is the local school system unappealing? Have crime rates gone up? The circumstances of the surrounding neighborhood and community can impact the home equity.
  • Market reactions: As seen with market downturns like 2008, if the supply of homes exceeds the demand, the home value will decrease. Therefore, decreasing the home equity.
  • Shifts in a home loan: By using home equity for the asset it is to take out a second mortgage or even buy a future home, you automatically decrease the home equity.

Find the Right Loan with Chris Doering Mortgage

Make sure to handle home equity with care. It is never advisable to use home equity to fund unnecessary big purchases like a new car, TV, or other items. To help best increase home equity, find the right loan with our team. Our team of loan experts can help you quickly achieve your home equity goals. Get in touch with a loan officer today.

How Your Credit Score Affects Your Mortgage Rate

Mortgage interest rates are inherently variable. They fluctuate based on economic factors, both global and domestic, housing supply and demand for a particular area, and the credit score of the borrower.

There’s not much an individual borrower can do to stabilize the national economy. You can be smart about when and where you look for a home and make informed choices about what you can afford. But the major determining factor of mortgage interest rates that you have the most control over is credit score. (more…)

Mistakes Made When Buying a New Home

Ways to Protect Your Credit

Protect Your Credit With These Seven Effective Tips

In the current economic climate, credit is more important than ever in the process of lender decision-making. Unfortunately, credit is also more vulnerable than ever to being stolen, tampered with, or breached due to the widespread accessibility of the Internet and significant advances in modern technology.

When our society relies so heavily on a form of financing that is rather susceptible to foul play, how do you ultimately protect yourself? Luckily, taking certain precautionary measures can dramatically lessen your chances of becoming another statistic in identity theft or credit card fraud. Here are several simple steps you can take to protect your finances and your identity.

Seven Steps For Protecting Your Credit

  1. Go Prepaid for Online Shopping
    Kim Zetter from points out that using prepaid, loadable credit or debit cards for internet purchases can add a thick layer of security over your actual finances. You can load an approximate amount onto the card that will cover the purchase in question, and after the funds have been withdrawn, you can banish the card for good. If you shop online frequently, you can also keep it around for future uses. Likewise, you can use pseudo credit card numbers to mask your real numbers. Financial institutions such as Bank of America, Citi Bank, and Discover offer this type of service because if online hackers can carry false or mysterious identities, then you should be able to as well.
  2. Check Your Credit Card Activity Often
    These days, you don’t have to wait for your credit card statement to come around through postal mail to know exactly what’s going on with your credit activity. You can log on to the credit card company’s website and observe the activity in real time. Larry Magid from urges consumers to stay on top of their credit by checking their accounts on a regular basis. Of course, you will always see a virtual general breakdown of purchases and payments that you have made in the past. However, if you notice any unusual or unfamiliar activity, it is suggested that you notify the credit card company immediately.
  3. Use a Fraud Alert to Your Advantage
    Fortunately, you have the option of placing a fraud alert on your credit report if you either sense suspicious activity or want to strengthen the protection of your finances. Credit bureaus often offer this feature free of charge, and Richard Barenblatt from Who Lends Here notes that it can protect you from disastrous scenarios that may happen down the road. Once the fraud alert has been placed on your account, lenders will need to go through a rigorous set of steps to confirm your identity before lending money or opening new lines of credit. This might be a bit of a nuisance for you, but imagine how useful it will be if a criminal attempts to steal your identity. This is why a fraud alert is completely necessary.
  4. Avoid Identity Theft Protection Services
    These days, almost any credit card company can be a provider of identity theft services, and these services are apparently the “be-all end-all” of your finances. These companies use scare tactics to convince consumers that they will eventually become victims of identity theft without their paid protection. What’s worse is that companies will charge anywhere from $100-$300 for annual coverage. What consumers don’t know, however, is that it is rather easy to do what these companies are doing for virtually no cost. If you ever come across an offer from a reputable company for free credit monitoringConsumer Reports urges you to take advantage of it. If the service is only offered for a limited period of time, be sure to cancel before it before the trial ends.
  5. Know How to Identify a Phishing Scam
    For many victims of fraud, the entire fraud process typically starts with a suspicious-looking email. In order to identify the scams these emails contain, follow these tips provided by Consumer Reports:

    • Examine the sender. You should immediately take precaution with emails that originate from unknown or fishy sources.
    • Study the content. Is the body of the email littered with grammatical errors? Emails originating from trusted sources will almost never have any sort of errors in spelling or grammar.
    • Determine what type of information is being requested. Specifically, if you are being urged to return lots of information about yourself (namely your name, address, phone number, date of birth, gender, etc.), avoid the email at all costs.
    • Hover over links before clicking them. This will help you determine the real destination of the link in question. If you’re being urged to click a link originating from your bank or credit card company, visit their website instead and navigate to the website section from there. As a rule of thumb, you should avoid clicking links in emails at all costs.
    • Avoid emails that request money in return for even more money. This type of scam can take many shapes and forms, but they all possess the same principle once they’ve been watered down.
  6. Use Cash, Cash, and More Cash
    USA Today reminds consumers that one of the only tried-and-true ways you can protect your credit is to use cash whenever possible. If you can avoid swiping your card, then it might be best to just leave it in your wallet. Even though security analysts work around the clock to strengthen retail databases, there are also hackers working the same amount of hours learning how to break these defenses down. Therefore, it might pay to make more frequent stops at your bank ATM.
  7. Get a Free Annual Credit Report
    Lastly, you should always take advantage of a free periodic credit report offered by Occasionally checking in on your credit report will keep you updated on any suspicious activity, and you can immediately report it to the credit bureaus and associated lending companies as soon as you notice it. You can pay a bit out of pocket to keep closer tabs on your credit, but this should only really be necessary if you’ve had problems with fraud in the past or if you suspect that there is currently foul play at work.

One Step To Learning More

Your credit is not just important for the home buying process: it is important for many other significant decisions and purchases you may want to make at any time in life. Therefore, it is essential to do whatever you can to protect your credit, so to learn more about how your credit comes in to the home buying process as well as more about how you can protect your credit, contact Chris Doering Mortgage today.