11/15/2021
🚨Wanting to buy a house but not sure what to do when it comes to your credit cards/revolving accounts? You don’t want to miss this post!🚨
CREDIT UTILIZATION
Credit utilization can make or break you when applying for a mortgage!
The typical “safe zone” is 30% utilization, this means using 30% or less of your credit card or revolving credit. Example: If you have a credit limit of $100 you want to avoid using more than $30
When buying a home you actually want to do everything in your power to bring your credit utilization down to 10% Keeping in mind the example from above, if you have a credit limit of $100 you want to keep it reporting at $10 or less.
How can I calculate my credit usage based on my credit limit?
It’s simpler than you know! You just open a calculator and divide your credit limit by .10
(ex. $2000 x.10=200)
DUE DATE V. CYCLE CLOSE DATE
“I use more than 30% but I always pay it off or down by the due date”
“How can I control what amount is reported to the credit bureau?”
When paying down a balance you want to pay it by your billing cycle close date instead of the due date! Why? The balance at the end of your billing cycle close date is what reports to the credit bureaus. If you look at your bill you’ll see the billing cycle start date, billing cycle end date and your due date. If you can’t locate the dates, reach out to each loan provider and they can give you your cycle dates.
What is a revolving credit? Like a credit card a revolving credit or revolving line of credit is for continuous use. If your line of credit has a maturity date such as a 72 month Auto Loan or 12 Month personal loan- this does not apply. A revolving credit is only a line of credit you can pay down and use again.
Come back soon for more credit suggestions 🙂
