Credit reports are generated by three credit bureaus (Experian, Equifax, and TransUnion). They all use a differing methods to calculate a figure that represents your credit history. The greater the score, the better your credit worthiness. Certain activities will have a detrimental impact on your score and can potentially discourage mortgage companies from granting you a home loan. The following are recommendations for future Franklin TN home buyers on credit activities to avoid before buying a home.

Credit Activities To Avoid Before Buying A Home

Delinquent Payments

Missing payments demonstrate poor credit habits and will therefore drop your rating. The length of time you are late (30, 60, or 90+ days) and how many times you are late also play a role. Late payments stay on your credit report for an extended length of time.

Debts Reported to Collection Agencies

If you are really behind on payments and a credit provider has completed their own attempts to retrieve money from you, they will likely move your debt to a collection company. This is reported to the credit bureaus. The history will remain in your credit profile even after you settle the amount owed.

Discharges

If a creditor is unsuccessful in collecting the total amount due to them, they may “charge-off” the difference. This could be the case if you fail to send payments or if you settle for a lower amount. Settlements stay on your credit file for 7 years. Future creditors will see this item and contemplate how likely you are to repeat that behavior.

Public Recordings

Bankruptcy, tax liens, judgments, foreclosures, and other similar issues are a matter of public record. Regardless of whether you resolve those items, the actual reporting stays on your credit report. Particular items appear for up to 10 years and others (i.e. liens) will never be cleared. Therefore, it is important not to let overdue accounts get this serious.

Recommendations For Future Franklin TN Home Buyers

All of the credit activities to avoid before buying a home detailed in this article make you a risky borrower and could result in higher interest rates or completely stop you from getting loans. Demonstrate good behavior and it will save time, money, and disappointment when it is time to purchase a property. These are the best recommendations for future Franklin TN home buyers. Keep in mind that this represents only a few typical credit issues. Consult a credit professional for information on your personal credit rating.