Lenders evaluate your creditworthiness before they can provide you with a loan. To increase your chances, make sure that your credit score is high and that you can present proof that you’re a trustworthy borrower.
Have you ever wondered why some people find it easier to take out a loan from a lender compared to others? One thing that makes these people stand out is their creditworthiness. Lenders in Utah like citycreekmortgage.com find it easier to allow you to take a mortgage loan if your creditworthiness is good. One factor that significantly affects creditworthiness is your credit score. Yes, it may take years before you can build an excellent credit score, but eventually, it will be worth it. So start building your credit score now.
Here’s what you can do:
Keep Credit Card Payments Up-to-Date
If you have a credit card, then make sure that you pay your dues on time. This is one of the things financing companies take a look at to determine your creditworthiness. You need to make sure that you keep your payments on time and avoid incurring penalties for late payments. According to Nerd Wallet, if you are still in the stage of building your credit, and you don’t have a credit card yet, you can apply for a secured credit card. This type of credit card will be backed by a cash deposit, which would be equivalent to your credit limit. This would establish that you pay well considering that payments will be taken from your deposit.
Avoid Closing Accounts
If you have several accounts, then at least try to keep them all open. Financial advisers would suggest that you keep these accounts open for six months. This is the minimum amount of time for you to be able to build a good credit score. Lenders would be scrutinizing these accounts when you would be taking out a mortgage loan. When you avoid closing accounts, your payment history will look better in the eyes of the loan officer evaluating your application.
Don’t Max Out Credit Cards
According to The Balance, lenders perceive individuals who max out their credit card as irresponsible. They know that when a credit card is maxed out, it becomes hard for debtors to pay them. When this happens, your chances of getting that much-needed loan become slim. The safe threshold when it comes to usage of your credit limit is not to exceed 50 percent. Below 30 percent usage of your credit limit is considered an ideal threshold.
When you start building your credit score now, you will find it easier to take out a mortgage later on. Time flies by fast, and before you know it, you already have a spouse and children, and you would find yourself needing a mortgage. Don’t wait for this day to start building your credit score. Start building it now.