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

Credit card offer for you!

“The credit card business is super-competitive right now,”.  “People are spending again. Banks are lending again. That’s all led to better deals for credit card customers willing to do their homework.”
Rather than getting a credit card from your bank, or accepting the first credit card offer you receive in the mail,  suggests getting out there and actively searching for the best deals for you. “Go online and see what’s out there. There are plenty of deals to be had,” 

How to find the right credit card for you?

Comparing credit card offers isn’t just about looking for certain criteria. The first step is understanding yourself and your needs. “Why do you want the card?” he says. “Are you looking for rewards? Are you trying to rebuild your credit? Do you want a balance transfer?”

The use to which you plan to put the card should be the first consideration when comparing credit card offers. “Knowing what you want from the card is the key to getting the most from your card. “If you never fly anywhere, you probably shouldn’t bother with an airline card.” Start out by comparing cards that meet your needs, and don’t waste your time with cards that don’t fulfill a purpose in your overall financial plan.
Once you know what matters most to you from your card, it’s time to look at other factors. “Pay close attention to the costs associated with the card,”. Some of the costs of credit cards include:

• APR
• Annual fee
• Balance transfer fees
• Foreign transaction fees

These fees vary widely, according, and you should realize what you’re getting into. If you know that you will occasionally carry a balance, the APR is very important. You should also consider how many rewards you are likely to earn in a year from regular purchases you make. An annual fee might not be a big deal if you have the potential to earn higher rewards that aren’t capped. With the right strategy, your rewards can offset your annual fee and still help you come out ahead in rewards than what you would have earned with a card without an annual fee.
If you are getting a card for a balance transfer, one of the considerations is how long the transfer period lasts. A card with a promotional period of 18 months can be of greater benefit to you than a card with a nine-month intro period. If you know you can pay off the balance in 18 months, it isn’t as important that the regular APR is higher on that card if the nine-month card will start charging you interest much earlier.
                      

 Perks that come with a credit card should also be considered. If you are choosing between cards that have similar costs and requirements, turn to the perks to help you make a decisions. “Is there a signup bonus? Does it come with a free credit score? Will the issuer allow you one late payment without charging a fee?” he says. “Are there special perks such as a concierge and travel discounts?”

What to do if you are rejected

Of course, applying for a credit card doesn’t automatically mean that you will be approved. “If you get rejected, there’s no need to panic,”. “You should try to find out why it happened.”
He suggests reading the rejection letter. You can even call the bank for more information. The rejection letter should include information about why you were turned down, whether it was because you don’t have a long enough credit history or whether your credit utilization is too high.  That sometimes the reason given points to a mistake on your credit application or in your credit report. “Fix those problems, and if there are larger issues, commit yourself to putting in the work to build your credit in the coming months.”
Using tools like  can also help you identify cards that you are more likely to qualify for. This provides you with a realistic idea of what to expect.
You might want to apply for another card if you are rejected, but it’s a delicate balance. “Applying for one card after getting rejected for another is fine,”. “Applying for five others is not a good idea. It can hurt your credit, and issuers can view it as desperate.”
The process of applying for a new credit card isn’t just about trying to get something you want. You also need to consider the implications of your move, since your credit will be impacted by your inquiry. If you don’t qualify for the card you want, take the time to evaluate your situation and work toward getting your credit in good shape so you qualify next time. “It’s best to take a more strategic, measured approach to credit card applications.”

Visit: www.cibilconsultants.com
Source: Secondary

Cash advances affect your credit score! Learn how?

Many credit card issuers provides a service to cardholders while allowing them to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate – even higher than credit card itself – and the interest begins to accrue immediately. On the plus side, cash advances are quick and easy to obtain in a pinch. Sometimes businesses with less-than-perfect credit use cash advances to finance their activities. In some instances these advances are even paid for with future credit card receipts. The amount of the cash advance depends on the credit score of a business and its credit card sales. In almost all cases, cash advances should be viewed as a method of last resort. Taking out a cash advance has no direct impact on your credit score, but it can have an indirect impact in various ways:
                                

• The interest on cash advances is significantly higher than the interest on regular purchases, and that interest will get paid off last, meaning it will collect high interest for a long time. This is true even if you are offered a no- or low-interest promotion, as it likely will not apply to the cash advance amount. If this affects your ability to pay the payment on the card, that could affect your credit score.
• It will raise your balance, which will raise your credit utilization, a measure that credit scoring models use when generating a credit score.
• A balance transfer or any of the resulting interest that puts you over the credit limit can lower your credit score. Even after the card is paid down, your credit report will show the highest balance reported, and other potential lenders will see that you were over the limit at one point, which could hurt your ability to get new credit.

All the above circumstances can lead in a cash advance negatively hurting your credit score.

Source: Secondary