Credit can rule your life if you mismanage it, which can hurt your hunt for the right home. Applying for loans and acquiring a mortgage can be hindered by bad credit, so here are some mistakes to avoid that could ruin your credit.
The little things you forget about can come back to bite you. Unpaid fees and invoices will haunt your credit if they’re turned over to collections, which is why you must always remember to pay those before you forget. This isn’t a matter of not having the money, it’s a matter of keeping track of owed money from sources other than your typical monthly payments.
Using Credit Too Much
While it’s smart to use your credit when it makes sense, being too liberal with your card can get you into trouble. It’s easy to see when you can’t afford something when you don’t have the money to buy it. Credit cards make things a little more complicated. When you get to the end of the month and you see how much your balance has risen, it can sometimes leave you shocked. The best measure is to pay it off as soon as you can to avoid piling up debt. A good habit to adopt is to pay off your card as soon as you have the money to do so, not just a little at the end of every month.
Not Using Credit Enough
Like it or not, the world we live in requires credit. The easiest way to start building your credit is to use a credit card to purchase something you were going to purchase with cash. As soon as you can, pay off your card with the cash you were planning on using in the first place. A few hundred dollars for new tires or a new computer is a good place to start. That way, applying for a car or house loan is made much easier. That is, if you stay debt free.
Be diligent about your credit and don’t let it get out of hand. Keeping the pitfalls in mind will help you greatly when you’re ready to purchase a home.