Credit scores are so important when you’re getting ready to purchase a home. This metric helps loan officers determine your interest rate and also which loan programs you qualify for. In this six part series were going to give you the information you need to know in order to raise your FICO® score and increase your ability to qualify for a home loan.
Step 6: Avoiding Credit Accounts with Excess Fees
Using credit cost money – if you maintain balances on your credit cards they will charge you interest rates. Installment credit also comes with closing costs and interest. This is why it is important to avoid excessive fees whenever possible. While this doesn’t directly impact your credit score it does free up more money to put towards debt and balances.
Avoid applying for in-store cards. While it may be appealing to save 10% on your purchase right then, store cards are notorious for having high interests rates. If you maintain a balance you could be paying way more for purchases.
Annual fees are sometimes charged by credit card companies when they are offering perks like cash-back or frequent miles. Make sure the perks that are included in the card are worth the fee, and that you actually use them before items expire.
When possible seek out cards that have 0% interest for the first year – this is great if you’re trying to pay down debt so long as you are paying off the debt and not adding more debt later on.