Did You Know?

It is important that you do what you can to improve your credit score. The lowest interest rates are reserved for borrowers with the best credit.

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Improve Your Credit History

Improving Your Credit History

First-time borrowers often have anxiety about low credit scores. They may not have a history of borrowing because they're young, they've never taken out a loan, or even had a credit card.

If you’re getting ready to shop for home mortgages, or any kind of large loan it’s a good idea to begin working on your credit history and getting that score up. To do that, it’s important to know the factors that affect your FICO score:

  • Making payments on time: 35%
  • Overall debt: 30%
  • Length of credit: 15%
  • New credit applications: 10%
  • Types of credit: 10%

Know Your Score

You can only fix something when you know it’s broken, and knowing your credit score is the first step to helping it go up. Under the Fair Credit Reporting Act, you have a right to request your own credit report from a credit bureau to review it. This allows you to dispute any errors by writing to the relevant credit bureau, which must investigate the dispute within 30 days.

Start Building Credit

Starting a credit history is as simple as signing up for a credit card. Use a credit card to pay for everyday items and set up utility bill payments online through a credit card account in your name. Keep in mind to avoid accumulating debt by paying off the balance in a timely manner.

Don’t Let Your Balance Go Past-Due

Your payment history makes up 35% of your score, making it the most important factor of your credit. The more behind you are on your payments, the more it hurts your credit score. Try to pay off your outstanding balances in full rather than carrying it forward. In addition to avoiding interest payments, it will reflect favorably on your credit report when a lender updates your account status to "paid in full."

Don't Use ALL Your Credit

A key to scoring favorably on your credit is leaving most of it unused. Experts agree that if you use no more than 30% of your available credit, it affects your credit score positively. For example, if you have a 3 credit cards, two with a limit of $1,500 and one with a limit of $2,000, you have $5,000 total credit available. Keeping your combined balance under $1,500 (30% of $5,000) will help maintain a good credit score, because it shows lenders that you are able to use your given credit responsibly.

Avoid Applying for More Credit

When you apply for a new line of credit, lenders perform what is called a “hard inquiry” into your credit. This review of your credit itself affects your score. Applying for credit a number of times in a short timeframe sends a red flag to lenders who might assume that you’re in dire financial straits. So, if you are in the process of repairing a low credit score, avoid making any new applications for credit.

About the One-Time Close Constuction Loan
You have a right to request your own credit report from a credit bureau. Review it carefully and frequently and dispute any errors that you find.
See Your Credit Scores From All 3 Bureaus
See Your Credit Scores From All 3 Bureaus

FHA Loan Articles

FHA One-Time Close Construction Loans: Issues to Consider

It’s a great option to consider if you want to build your dream home on your own land instead of buying someone else’s already-lived-in house. FHA One-Time Close mortgages are also referred to as single-close construction loans--you’ll see these terms used interchangeably.

Down Payments for FHA Loans

One of the major hurdles that keeps families from purchasing a home is the need for a down payment.  The FHA’s goal is to offer more homebuying opportunities to low- and moderate-income Americans and set more easily achievable down payment requirements for borrowers. 

When Should I Get Approved for a Home Loan?

One of the first steps to take when you decide to buy a home is getting pre-approved for a mortgage. It is important to know what it means to get pre-approved for a home loan, and what the pre-approval letter does and doesn’t do for your home buying chances.

What Affects a Home Loan Applicant's Credit the Most?

A home loan is one of the most important investments you can make. Buying a home means owning property, and being a homeowner means there's potential to watch your investment grow in value over time.  But first, the lender has to make sure the borrower is a good credit risk.

Reasons for FHA Refinancing

Interest rates started to decline in 2019 and still seem considerably low. The average rate for a 30-year, fixed rate home loan has fallen from 4.94% in November 2018 to 3.13% in October 2021. A point drop in your interest rate could translate to huge savings with each monthly payment

FHA Loan Requirements for 2021 and Beyond

The FHA’s aim is to make homeownership more affordable and accessible for Americans, and it has been doing so for decades. It insures home loans made by FHA-approved lenders so borrowers can purchase single-family and multi-family homes in the US and its territories. 

-- Find More Articles in the FHALoan Library --

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