One of the keys to successfully qualifying for a mortgage or any other type of credit is learning how to use your credit card. Credit cards can be a very useful tool when used properly but unfortunately credit cards don’t come with instructions.
When I work with first time home buyers the most common blunder that I see is someone who got a credit card when they were in University or College went out on a shopping spree then remembered that they didn’t have any income to pay for it all and defaulted on the card. The sins of yesterday always have a way of coming back to haunt you and that little mistake 10 years ago can make it very difficult for you to get financing. Here are some simple tips on how to use your credit card to maximize its benefits:
Limit your number of cards. It’s easier to keep track of expenses, and reduces the chance of a missed payment.
Transfer credit card debt. It’s a good idea to always pay your credit cards in full each month. If you are carrying a balance, a personal line of credit offers a much better interest rate.
Don’t spend what you don’t have. Use the convenience of a credit card only knowing the money is in the bank.
Be diligent with payments. Never pay the minimum only. Your original purchase could end up costing you twice as much.
Avoid missed or late payments. You could incur additional fees and a black mark on your credit rating.