When I was a kid, my mother used to fill my head with the most peculiar thoughts that she’d call “facts”. For years, I thought that if I left the cap off the shampoo bottle, the shampoo would “lose its fizz”, much like soda. One Thanksgiving when her turkey failed to cook in the allotted amount of time, she insisted that the electricity throughout the entire home was “not hot enough” to properly heat the oven. (This sounded unreasonable even to a ten year old…) When during a family game of Pictionary, she pointed to the northwest corner of a map of the United States as a clue for “Washington, DC”, I contemplated resting my brain cells while at home and only making them available for knowledge consumption when in the confines of an accredited academic institution.
I’m glad I didn’t do it, because if I had, I would have missed one of the most valuable pieces of advice I ever received as a young adult – that being to appreciate, respect and protect your credit. My mother was militant when it came to this subject and I’m ever so grateful it rubbed off. Without good credit, the American dream of home ownership is at worst, out of reach and at best, a far more costly venture than it needs to be. People with good credit get the lowest interest rates. People with bad credit get high interest rates or no loan at all.
With that said, here are a few steps for ensuring your credit remains good to excellent, thus enabling you to get the best mortgage rates available when looking for your Cape Cod home.
- Review your credit reports. The first step to ensuring you have good credit is obtaining copies of your credit reports. Did you know you’re entitled to one free copy of each credit report per year? The place to go for this is http://www.annualcreditreport.com/. This site provides consumers with a secure means to request and obtain a free credit report once every 12 months from EACH of the three nationwide consumer credit reporting companies in accordance with the Fair and Accurate Credit Transactions Act (FACT Act).
- Correct any problems immediately. You should review all 3 credit reports carefully and be sure they are accurate. If anything is incorrect, pull together all supporting documentation supporting your claim and report it to the agency reflecting the error. Each credit report should tell you how to submit corrections.
- Know your credit score. The credit reports obtained from the site mentioned above do not include your actual scores. You will need to pay for those. I recommend getting your score from EACH of the three credit reporting agencies annually. It will cost you roughly $30, but when you consider the cost of being surprised by a low credit score, it is well worth it. If you REALLY want to keep an eye on your credit, subscribe to a credit reporting service. I use Credit Secure by American Express which costs roughly $12 per month. I have online access to my credit report 24-hours per day and am notified immediately of any changes, such as a new credit card being opened in my name.
- Improve a low rating. If any of your scores are below 700, be sure you understand why and take the necessary steps to improve it. Pay down credit cards so that you’re not near the limit of your available credit. Be on-time with all payments going forward. Be sure your home equity line of credit (HELOC) is listed as mortgage debt and not revolving debt. (Like cholesterol, there’s “good debt” and “bad debt”…).
These are just a few common tips. For more guidance, visit Yahoo! Finance, myFICO.com, BankRate.com, and/or the credit reporting agency websites (Experian, Equifax, and TransUnion).
Thanks, Mom. I miss you.