Don't Let Rate Increases Impact Your Purchasing Power
If you're currently trying to get qualified for a home loan, you may have had a shock these last few months. Many consumers have found that they've had their purchasing power diminished because of the quick increase in interest rates.
What many people don't realize is that your credit score has a direct impact on your purchasing power. More specifically, your mediocre credit score can keep you out of the home buying market. In a blog post, Equifax outlines the cost differences between 679 and 700, resulting in a potential $100 + increase in a monthly mortgage payment, as well as a $21,000 increase in interest paid over the course of the loan.
That's an expensive consequence for a mediocre credit score. If you are like most consumers, you're hovering just below the 700 mark. Instead of missing out on your new home, take action. Here are a few things you can do to maximize your purchasing power.
- Check your credit report. Don't worry about your credit score on sites like Credit Karma or Credit Wise. They will most likely be dramatically different than your lender's FICO based credit score. Instead, focus on the content, and make sure your account information is accurate.
- Stay vigilant if you find inaccuracies. If you notice inaccurate information on your credit report, fix it. You can do this by disputing the information at www.annualcreditreport.com or by contacting a Credit Service Organization like Premier Credit to assist you in that process. Unfortunately, 27% of consumers deal with inaccuracies on credit. Don't let them impact your purchasing power.
- Be aggressive with creditors. If you know that you have collections or other outstanding derogatory debts on credit, be aggressive in getting them resolved. However, if any of those accounts are older than 3-7 years, you may want to consult your lender before diving into negotiations with your creditors. Settling out recent collections may have a short-term negative impact on credit, so plan accordingly.
Remember, there is no magic wand that will miraculously fix your credit problems. However, with the right tools and a little determination, you can reach your goal of credit qualifying and maximizing your purchasing power.
If you have questions about responsible credit repair, please contact the team at Premier Credit for a free consultation to help you reach your credit goals.