When it comes to financing a home, credit plays a huge role. On a larger scale, when it comes to building wealth and creating financial freedom, having good credit is invaluable.
Focusing specifically on home financing, your credit reflects your ability to responsibly handle credit or your "credit worthiness." Lenders use this information to help determine the type of financing that can be offered and the rate that will be charged to borrow the funds.
If you have limited credit or no credit at all, you may be subject to paying higher rates and fees when seeking financing for homes or cars. Additionally, you may find that your applications for credit may often be denied.
There is good news. There are some fairly easy ways that credit can be built or expanded. Building and repairing credit can often take longer than the time it takes to damage it, but over time and with consistent responsible you can develop credit that will assist you on the road to financial success.
Here are 3 ways to build credit:
Apply for a secured credit card: Secured cards usually require a deposit in order to open the account. Be sure that the secured card for which you apply reports to the credit bureaus. With responsible usage you could see a boost in your score in as little as 6 months.
Become an Authorized User: Leverage the age and credit health of someone else's account. Age of credit accounts is a factor considered by bureaus when scoring credit. This tactic is helpful if you already have credit in your name. This strategy should not be used with an American Express card because they use the date the user was added as the open date.
Apply for a Retail Card: Credit cards from retail stores can help build credit when used responsibly; however, they tend to have much higher fees and rates, so "user be ware."
Nicole Rivers Moore
I am a Certified Mortgage Planning Specialist and Loan Officer with Jersey Mortgage. I educate and empower Home Buyers and Investors so that they can make decisions about home ownership that support their overall financial goals. Servicing NJ, PA, CT, FL, NY. NMLS: 1150526