You've found the Denver home of your dreams, and you've secured a mortgage with a fantastic rate. A word to the wise: keep your credit score in pristine condition; it will affect your ability to refinance or should you choose to purchase another home, your ability to secure financing for that property. Here are six ways to manage home-related spending, all while keeping your credit score in a winning position.
- Postpone refinancing plans until your credit is totally clean
The smallest flaws on your credit report can cost you money. Get a copy of your credit report annually, and check it closely. If there are potential problems, consider postponing any activity such as refinancing or a home equity line of credit until problems are handled.
- Pay your mortgage on time
Not all late payments are created equal. Almost nothing hits your credit score harder than a late mortgage payment. Payment history generally accounts for 35% of your credit score, and credit-scoring agencies consider late home payments to be more serious than late credit card or car loan payments.
- Think hard before taking on a second mortgage or a home equity line of credit (HELOC)
Taking a second mortgage, or HELOC, can have a negative impact on your credit score, because 30% of your credit score is based on how much you owe to creditors. Paying the loan on time will help. Also, you can mitigate the credit score damage of a HELOC by staying within 30% of the loan limit.
- Protecting your mortgage also protects your insurance rates
Late payments on your mortgage may also affect your home and automobile insurance rates, potentially costing you hundreds of dollars a year.
- Pay your utility bills and property taxes on time
If you’re late on your utility bills, your account could be assigned to a collection agency. That agency, in turn, may report your delinquency, causing a drop in your credit score. Late payment of property taxes could also affect your credit score if you find yourself with a lien on your property. Since liens are public records, they may appear on your credit report and might cause a drop in your credit score.
- Avoid taking equity in the deal if you’re refinancing
Refinancing your home generally won’t have an impact on your credit score as long as you continue to pay your loan on time. However, if you extract equity in the deal, you could marginally affect your credit score because the amount you owe will increase.
The Bandy Team of real estate experts is ready to help you find the perfect new Denver home. Considering relocation to Denver or the surrounding area? Read some Bandy Team testimonials, and see how we can provide all the help you need to make an easy transition into a home in Saddle Rock, housing near Fitzsimons, (Anschutz Healthcare Campus) or property in another Denver community that's just right for you.
Curious about the value of your Denver home? Click here for a quick estimated home value.
Our trusted professionals will be there to help you every step of the way!
Until next time,
Marianne Bandy, Team Leader
The Bandy Team
Keller Williams Park Meadows
720-466-3790
