How to Improve Your Credit Score (Home Loan Credit Score) in 2018

Do you wish you knew how to improve your credit score in order to buy a house? Well today I have a very special guest with me – Jarad Brown from Certainty Home Loans and we are starting right now Hey everyone welcome back to my channel

I'm Karin Carr, a REALTOR in Savannah, Georgia with Keller Williams If this is your first time here and you're interested in all things real estate related in the Savannah area, go ahead and subscribe because the information you get here is pretty awesome and I know you don't want to miss anything So I am so excited to have Jarad Brown back with me You may remember that we did a video once before talking about the pre-approval process and how to get a loan If you're interested in that just click right up here and you can watch that video

So welcome! Thanks for coming back Thank you for having me I thought today we would talk about how you can improve your credit score and why that's a big deal when you're going for a home loan Very, very important stuff As a lender we look at three main things

We look at your ability to repay, which is your income and your liabilities And then we look at your worthiness, your credit worthiness, which is your score Unfortunately the score says a lot about how you have managed credit And then we look at how both of those things play going forward, both your income and your credit score, so your credit score is a big piece of whether you qualify or not A lot rides on that number

And if they have a lower credit score does that affect how much they'll be able to borrow? Absolutely The lower their score, the more of a credit risk they are so we're going to be less likely to lend larger amounts of money to that borrower So a borrower that comes in with a lower credit score around you know, 620s, we won't take their debt to income ratio as high as we would if somebody came in with a 780-800 So if they have a better credit score then they're gonna be able to borrow more money and get a nicer house in a better neighborhood? Yes, they can borrow more money and at more affordable rate The better your credit score the more affordable the house is going to be to you, the more likely you are going to be to pay down and then further increase your credit score So why don't you give us a couple of actionable tips that people can take to raise their credit score in the next six months I would say for the first time homebuyer who's just now establishing credit for the first time one of the best things you can do to grow that credit is to use that credit

If you're old school, spending cash on things, which is a great way to go, but whenever you want to borrow money you kind of have to have that established, like "Hey, I'm trustworthy I borrow money I use credit and I use it responsibly" So for that person who's trying to set up their credit for the first time I highly recommend getting a credit card and use some gasoline purchases Gasoline is something that you're not gonna go out and buy more gas because you have a credit card

Or go out and buy nicer gas because you got a credit card And it's something you're already spending money on anyway You have to buy gasoline to get to work, to take your kids to school, whatever that is so it's something that's inexpensive and you're already incurring So get that credit card and just know whenever you go to pay at the pump use your card At the end of the month pay that off in full

I would tell anybody who doesn't currently utilize a revolving credit card get one Maybe not a Banana Republic one but one that you can use for gasoline purchases Use it for gasoline purchases ONLY Show that you have the responsibility, pay it off, and you'll reap the benefits on your score absolutely And then of course we have borrowers that come across that have a long history of credit and the history that might not be great

But there is hope for those borrowers too Those are the ones that we usually see, they're scared to have their credit pulled because they're afraid that it's gonna hurt their credit having that hard pull on their score But I'm likening it to go into the doctor right? So you know that you have an issue with credit, you've told me "Hey Jarad, I've kind of had an issue with credit" Be it a divorce or loss of job or just something that has affected your score

Just like an illness you need to go to the doctor and see where do I stand? So I highly recommend getting in touch with a lender Having them pull that

If it's gonna affect your score it's gonna be a couple of points It's not gonna put you to where you can't buy or it's not gonna hurt itself and the gain from that from having your credit pulled if you have it done with a local lender they will pull your credit, they'll go over ways that you can increase your score Sometimes it's as little as paying down some debt using some of that tax refund to pay down a credit card that's been maxed out for the last two years You know, it might be that easy to get from a 620 to a 670 Then you have some clients that it's going to take a lot longer

For some people it might take six months or a year to get the credit right But if you never have your credit pulled out of fear and never look, you never start that one year clock No matter what your credit score is you're never that far off from buying a house And if you never start working on the credit it will never get to where you want it to go So if somebody starts making these sort of improvements how long do you think it would take before they see a big change? Well with every client it's gonna be different

We've seen clients turn their credit around in the matter of a month Some clients as I said take a little bit longer But the important thing to know is if you're currently renting, which most people who you know have credit issues currently rent, before you sign that next lease you need to know what your timeline is, right? So you could think, "Hey you know I'm probably six months out before I could get my credit in the right place, my lease runs up in two months, I just need to go in and resign my lease and be stuck in this apartment for another year" Maybe not! Go on and call a lender, get that credit application in so that we can tell you, "Okay, we can wrap this up in a matter of a month Do you have $500 to pay down on your Target card? Yeah? Cool

I can have you eligible to buy a home in a month and I've just saved you from one year worth of renting Or it could be this is gonna take us one year to do Why don't you go ahead and renew that lease at this apartment? And by the time that lease comes up we will have you out home shopping to make sure that this is your last year wasting money on rent So now you know how to improve your credit score But what if you have no credit history whatsoever? Absolutely well as we just discussed you know we want to establish credit and get that going but for some buyers especially Millennials, people coming straight out of college that have been using cash

If you have no credit score there are programs even for you right now that we can get you into that uses non traditional credit qualifiers to get you into your first time home It's never too early to sit in front of a lender and see what your options are, see what's available to you, and make that financial plan so that whenever whenever it comes time for you to fall in love with the house you know confidently that you can go out there and put an offer on it and get it Jarad has a one-page PDF download all about this program for people with no credit history, so if you want to get a copy of that just click this link right up here and you can go ahead and download it directly from my site Thank you so much for watching If you like this video be sure to hit the thumbs up button, leave a comment down below, share it with a friend and consider subscribing to my channel

I post new videos just like this every Monday and you don't want to miss anything Thanks again for watching and we'll see you next week BLOOPERS: Thank you so much for watching (let me do that one more time) Do you wish that you could accrue approve Okay, that's not bad

Not great Aaaaaaaaaand brain cramp Nice Cool! Alright I think that was plenty