Thinking About Refinancing? Better Cradle That Credit
Written By: Jaymi Naciri
Wednesday, January 30, 2019
1. If yoursquo;ve got good credit, keep it that way.
This is no time to get lax. Even one late payment can impact your score and keep you from getting approved or securing a better interest rate. Stay extra alert while yoursquo;re waiting for your loan to close to make sure nothing can derail your refi.
2. Donrsquo;t change your habits.
Think that laying off your credit cards will look like responsible spending to the bank? Donrsquo;t assume. They look at your long-term spending habits and they want to see steady patterns of behavior. A sudden change could trigger a red flag, so be sure to ask your lender before you do anything different. That includes overspending on your credit cards. You can always go on a shopping spree after your loan is closed.
3. Donrsquo;t open any new accounts.
This is not the time to open an Old Navy account to save 20 on your winter wardrobe or apply for a Best Buy card to finance a new TV. Steady and stablemdash;thatrsquo;s what the banks want to see. They donrsquo;t care that your winter coat is two years old or that your TV is only 42 inches.
4. Donrsquo;t close any accounts, either.
If you close credit cards, your score can actually fall. ldquo;Thats because closing card accounts impacts a key credit scoring factor called a credit utilization ratiomdash;the amount of debt you have compared to your available credit,rdquo; said CreditCards.com. ldquo;As your debt levels rise >
5. Be careful with the stuff you find on your credit report.
Did you pull your credit report and find an old collection account or charge-off? You might think that paying these items off right away is the best move to get rid of them for good and raise your score, but charge-offs and the like can be complicated. Itrsquo;s best to talk to your lender first. He or she may think itrsquo;s best to leave them alone, or they may have a good strategy for having the items removed from your credit report.
6. Donrsquo;t move your debt around.
Balance-transfer credit cards are a great option for consolidating debt and potentially lowering your payment, but think twice before opening new cards see 3 above or moving balances around. Your lender will be able to lay out the best course of action for you.
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