Kind of like the school teacher, the real estate agent wears multiple hats in the financial market. When a homebuyer presents with the desire to buy a home and their credit score is just not high enough to secure the right home loan for them, the financial advisor hat must come out and the real estate agent needs to work with the potential home buyer to raise that credit score.
The Basic of Raising a Credit Score
There are three main ways to increase credit score and none of them take less than a year. The homebuyer will need to focus on old credit, bills and new credit.
Old Credit - Paying off all old credit debts on time is essential to raising a credit score. This does not mean the potential home buyer needs to pay everything off in a matter of months, it simply means that all current credit bills are paid on the date they are due.
Bills - Household bills and medical bills makeup a huge part of the overall credit rating. When a potential home buyer presents with a low credit score, more often than not, the recent credit history will show past due payments. Buying a home is about more than just paying a mortgage payment. The bank needs to believe that the mortgage will be paid on time, every time and if the potential home buyer does not pay everyday bills on time why will they pay the mortgage on time.
New Credit - In order to boost their credit score, some potential home buyers believe they can open a new line of credit to take advantage of a special offer and then immediately close the account. This does NOT help the credit score. The buyer needs to keep that line of credit open in order to establish a decent length of credit history. This is especially important for home buyers who have very little credit or those buying early in life.
How Long Will It Take to Secure the Mortgage?
This question is one that no one will be able to answer. The credit rating of a potential home buyer will vary from month to month depending on the action reported by credit extending businesses. If the home buyer pays all bills on time for a period of 1 to 2 years and practicing safe and smart credit decisions, the rating will rise. How far it rises will depend on how low the initial score was.
Julia Vakulenko is a licensed broker associate with Tampa4U.com Realty. She has one of the hardest working Tampa Real Estate team in Florida.