Your credit needs to be in shape, before you apply for mortgage!

One of the biggest purchases you will ever make is likely to be your home. A home purchase is usually so large that you need to borrow money to complete it. Your mortgage is a large amount to borrow, no matter the price of your home. As a result, one of the best things you can do if you want to save money over time is to get the lowest possible mortgage rate.
The most important factors considered by mortgage lenders when determining your rate is your credit score. “The higher your credit score, the lower the rate you’ll get for your mortgage,”
She points out that lenders will also look at items like your debt-to-income ratio, employment history, and down payment when approving you for a loan and setting your interest rate, but a good credit score is the item that carries the most weight in determining your interest charges. “Over the course of the loan, a lower rate can save you a ton of money,”.
                                     

How to improve your credit score before applying for a mortgage?

The time to work on your credit score is before you apply for your mortgage. The first step is to check your credit report. 
Look through your information to determine if there are inaccuracies in your report dragging you down. Those need to be corrected if you want to see your credit score improved. Cibil Consultants offers insightful information about your financial situation so that you can identify potential problem areas to target.
Your payment history is the biggest factor influencing your credit score, so make sure you continue to make your payments on time. “If you’re not already on a budget and tracking your spending, you need to set this up right now,”. “This will help ensure that you pay all your bills on time.”
You can’t make up for past late and missed payments, though, so one way to help get your credit score in good shape is to pay down some of your credit card debt.
 Credit utilization is the second-most important factor in determining your credit score, and one of the easiest difficulties to overcome, if you have the means to pay down some of your credit card debt. “The golden rule is to keep your credit utilization ratio below 30%,” she says. “But if you want to boost your score as much as possible, keep it below 10%.” Between paying your bills on time and paying down credit card debt, you should be well on your way toward boosting your credit score to a point where you qualify for a better mortgage rate.

How long does it take to see improvement in your credit score?

The chances are that you won’t see an immediate improvement in your credit score. Your credit score is based on information that is reported to the major credit bureaus, so it depends on when your creditors report their information. Many credit card issuers report your balance (and your current credit limit) to the bureaus every 30 or 60 days. This is another reason that reducing your credit card debt can help you boost your score relatively quickly. However, there is no guarantee that your information will be reported as quickly as you like, so you might need to wait 90 days or more to see improvement.
 Black marks on your credit history can slow down your ability to get your credit score in good shape. “For someone who has a bankruptcy in their recent past, it will take longer to see improvement,” she says. “If you don’t have negative items on your credit report, you just need to wait until you can get your utilization ratio as low as possible and the issuers report it.”
Even though it might be tempting to apply for a mortgage first, and then worry about the credit score later, it’s better to wait. You won’t be offered a good deal if your credit score is only fair. Even saving 1% on your mortgage can mean a savings of tens of thousands of dollars over the course of a 30-year loan. Waiting a few months to get your score into the higher range of good, or getting it up to excellent, can be a smart money move.
“Unless you have a reason to get a mortgage as soon as possible, it’s best to wait until you can maximize your score,”. “It truly does make a huge difference in your monthly payments and this will help you in the financial long run.”

Source: Secondary

Right time to shop for credit cards

There’s no uncertainty that credit cards are extremely portable, ideally, they should be used as a temporary substitute for carrying cash. Often credit cards come with various discounts and additional benefits about which you must be acknowledged. However, when you decide to acquire a credit card, there are abundant elements to be reviewed to obtain the ace advantages for using credit cards.

Credit Limit

This is the amount of money that you are granted to borrow subjected to credit card without involving other costs. Depending on your credit history, the credit limit will be decided. You don’t want a situation in which you’re close to maximizing out your credit limit, as you are likely to attract the over-limit fees. It can hurt your credit score – and some credit card issuers have cut customers’ credit limits to an amount that’s lower than their current balance.

The interest rate

The interest imposed as the annual percentage rate on a credit card. You can opt either for a fixed rate or a variable rate that is bound to another financial symbol, usually the prime rate. With a fixed-rate card, you can predict how much you will be charged as it maintains the same interest every month; a card with a variable rate fluctuate every month. However, even a card with a fixed interest rate can change based on certain parameters, such as paying your card – or any card – late, or going over your limit.

Ease of balance transferring

Almost every credit card company provides the facility of balance transfer. Due to this option availability, you can easily transfer existing debt from one credit card to another as per the usability. The new card credit limit will be lessened subsequently. While transferring the balance, you cannot exceed 80% of the credit limit. The transfer procedure takes more than seven working days.

Fees and other penalties

Go for cards which offer moderate fees. Common charges include fees for transactions, such as balance transfers and cash advances, or for asking to increase your credit limit or paying your bill late. The annual fee varies among card issuers as well as cards depending on the negotiation at the time of purchasing the card.

Incentives

While using the card, one can earn reward points every time as an added benefit to users of credit card. These reward programs does not get expired and you can redeem them anytime as per the convenience. Assuming you’re going to make the purchases anyway – and the card issuer doesn’t charge extra for the rewards program – it can be a good advantage. Opt for a program that offers more elasticity and rewards you will really utilize.

Access to cash withdrawal

The banks gives an ATM PIN to the credit card holder as per to make cash withdrawal from your credit card easily. Keep in mind, doing cash transaction against credit card attracts the high interest rate from the ATM. However, it is suggested to use this facility at time of urgent needs only.

Visit: www.cibilconsultants.com

Source-secondary

How does medical debt affect your credit score?

Even when you have health insurance, medical costs can add up, forcing you to borrow in order to pay your bill. While it would be nice to think that the debt you incur for health care costs won’t ruin your credit, the reality is that, like any debt, can impact your credit score.

“Medical debt that appears on your credit report normally hurts your credit score, no matter the reason for how it got there. Medical debt can be reported by the providers, collection agencies, and through public records if the creditor files suit in court.”

Medical debt and your credit score

How medical debt impacts your credit score also depends on the scoring model being used to determine your score. 
Medical debt that has been sent to collections will have a smaller impact on your score than non-medical collection accounts.
However, “Not every lender uses the most current version of credit scoring models.” This means that your medical debt might still count against you, depending on how it is reported, and which scoring model and version of that scoring model are used. In general, though, it’s safe to assume that your medical debt is likely to have some impact on your credit score, especially if you have missed payments. Any debt account that isn’t kept up to date will drag on your credit score.

                                                

How to reduce the impact of medical debt

“The best way to keep medical debt from dragging down your score is to keep it off your consumer report. In many models, paying off your medical debt can also prevent it from having a big impact on your score. The good news is that medical debt is in a class by itself when it comes to your credit report and your score.
The information on your credit report appears there because it has been reported by a creditor or service provider. This means that if you can work out a payment plan with your provider, and you stick to the terms, there is a good chance that it won’t be reported to the credit bureaus. “Most providers will not report medical debt when consumers are actively communicating, and making an earnest effort to resolve open claims issues with insurers, and paying down the balance.” 
Many hospitals and other health care service providers offer payment plans for expensive procedures. Additionally, you can usually find reasonable payment terms if you have a high deductible. The problems come in when you stop making payments as agreed and the provider feels like the account needs to be turned over to a collection agency. “Most providers do not have systems to report, but collection agencies do.”

Also, be aware of the difference between organizing a non-loan payment plan with your provider and the “payment plans” offered as loans through third parties. These types of plans are commonly offered by dentist offices and vision specialists. You are referred to a payment plan, but this plan is actually set up through a third-party and is a special financing arrangement. In some cases, these arrangements are reported as the loans they are, and appear on your credit report. Understand the distinction before you agree to a payment plan.

Paying off your medical debt can also reduce the impact on your credit score. Increasingly, there is pressure for credit scoring models to stop “counting” medical debt — even collection agency medical debt — once it has been discharged. Make an effort to pay off your medical debt, and you can reduce its impact on your credit score.

Watch out for identity theft

Finally, be on the alert for fraudulent medical debt. Medical ID fraud is a growing problem. Someone might use your information to receive health care, and then skip on the bill. This results in medical debt in your name. Check your credit report regularly for these types of fraudulent accounts. If you notice billing for a medical procedure that you didn’t have, follow up and dispute the account. You will likely need to prove to the health care provider that you weren’t the one who received the treatment. This can be difficult to clear up, and it’s even harder the longer the account sits, so make sure to check your credit report regularly for errors.
Like any other debt, medical debt can impact the way financial companies view you. Your best defense is to keep on top of the situation, and try to avoid falling behind.

To learn more about Identity Theft visit www.cibilconsultants.com
Source: Secondary