Build credit before house-hunting!
Buying your first home is one of the most amazing feelings and is generally a very high-priority task on the minds of most individuals. However, getting your hands on your first home is not an easy task for all customers. Some customers suffer from bad or no credit history which ruins their chances of availing mortgage. Not having a credit history is one of the most problematic things for customers who are unable to get their home loan sanctioned by lending entities.
How to build your credit history?
Credit history isn’t something that can be built in a matter of days or weeks. If you do not have a credit history because you have never taken a loan before and because you do not possess a credit card, then you will require at least a year or more to start the process of credit building. Here are a few simple steps that will take you closer to purchasing your dream house.
1.Apply for some kind of credit as soon as possible. The best bet here would be to go for a secured credit card which requires a collateral as security deposit. To avoid getting into trouble with overspending or unnecessary usage of credit card, do not make purchases which you do not need. Use your newly procured credit card to pay for staple items like groceries, gas etc. This will ensure that you use your credit card for the right things without taking the risk of overspending.
2· Certain steps that point towards a disciplined financial planning will need to be taken. Pay your credit card bills as soon as you receive them. Try your best not to postpone payment and absolutely avoid missing any credit card bill payment. This will show that you are a regular and responsible credit card holder and will reflect positively on your credit report.
3· Ask your telephone or internet service providers to report your regular bill payment history to the credit bureaus. This will also work towards strengthening your credit history.
4· Buying a house is a colossal task which requires you to tighten all your financial strings in order to make up for the required cash, especially down payment. Avoiding any heft cash outflows should be an ideal strategy while you are planning to avail your first home.
5· Consulting a home loan expert for getting a home loan is advisable. The expert can guide you through the process of zeroing down on a specific home loan provider as well as a particular finance scheme that suits your financial status the best.
6· Getting pre-approved for home loan even before you start house-hunting is a brilliant idea. This will prepare you well for looking at various property options and choosing from them.
7· Sometimes, a first-time house buyer does not have any substantial assets to his name to furnish as security deposit. In such a case, you should try to open fixed deposit schemes with banks. Once, you have a fixed deposit open, try getting a credit card issued by the same bank. This will save you the hassle of running from one bank to another.
With the above points in mind, anybody who is looking forward to availing home finance can start building up his/her credit history positively. The most important part in the credit score of a person is played by timely bill payments. Once the credit history hassle is sorted, individuals can start looking for a house with peace of mind.