Preparing For A Showing

Here Are Some Helpful Tips To Ensure Buyers Love Your Home!

1. Open all draperies and window shades during the daylight hours.

2. Turn on all lights and replace bulbs with high wattage bulbs where needed.

3. Open windows a half hour before showing to circulate fresh air.

4. Place fresh flowers on the kitchen table and/or living room.

5. If possible, bake cookies or bread to add an inviting aroma.

6. The kitchen and bathroom should sparkle.

7. The house should be picked up and beds made.

8. Pets should be removed.

9. Eliminate pet odors, not everyone may share your love of animals and some people may be allergic.

10. All jewelry and valuables should be secured or removed.

11. Bathrooms should be cleaned, with towels folded and lids down.

12. When you leave the house, please leave it as if you know it is going to be shown, you never know when the right person is going to look at it!

Hard & Soft Credit Inquiries: What They Are And Why They Matter

A hard inquiry may impact your credit scores and stay on your credit reports for about two years. By contrast, soft credit inquiries won’t affect your scores.

Your pie is divided into slices, each of which represents a different factor that goes into your credit scores. One large slice is your open credit card utilization rate, another is your percentage of on-time payments, another is the length of your credit history and yet another is the number of derogatory marks on your credit reports.

And then there’s a tiny slice that represents your hard credit inquiries. Every time you apply for more credit, you take a small bite out of this slice. But what exactly is a hard inquiry, and how much of an effect does it really have on your credit?

Let’s start with the basics.

What is a hard inquiry?

Hard inquiries (also known as “hard pulls”) generally occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. They commonly take place when you apply for a mortgage, loan or credit card, and you typically have to authorize them.

A hard inquiry could lower your scores by a few points, or it may have a negligible effect on your scores. In most cases, a single hard inquiry is unlikely to play a huge role in whether you’re approved for a new card or loan. And the damage to your credit scores usually decreases or disappears even before the inquiry drops off your credit reports for good.

Common Question

How long will a hard inquiry stay on my credit reports?

Generally speaking, hard inquires stay on your credit reports for about two years.

That doesn’t sound so bad, but you may want to think twice before applying for a handful of credit cards at the same time — or even within the span of a few months. Multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer, as it suggests you may be short on cash or getting ready to rack up a lot of debt. So consider spreading out your credit card applications.

What is a soft inquiry?

Soft inquiries (also known as “soft pulls”) typically occur when a person or company checks your credit as part of a background check. This may occur, for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain credit card offers. Your employer might also run a soft inquiry before hiring you.

Unlike hard inquiries, soft inquiries won’t affect your credit scores. (They may or may not be recorded in your credit reports, depending on the credit bureau.) Since soft inquiries aren’t connected to a specific application for new credit, they’re only visible to you when you view your credit reports.

Common Question

Will checking my own credit scores result in a hard inquiry?

No. This is reported as a soft inquiry, so it won’t lower your scores. You can check your VantageScore 3.0 credit scores from two major credit bureaus, TransUnion and Equifax, for free at Credit Karma as often as you like without affecting your credit scores.

Examples of hard and soft credit inquiries

The difference between a hard and soft inquiry generally boils down to whether you gave the lender permission to check your credit. If you did, it may be reported as a hard inquiry. If you didn’t, it should be reported as a soft inquiry.

Let’s look at some examples of when a hard inquiry or a soft inquiry might be placed on your credit reports. Note: The following lists are not exhaustive and should be treated as a general guide.

Common hard inquiries

• Mortgage applications

• Auto loan applications

• Credit card applications

• Student loan applications

• Personal loan applications

• Apartment rental applications

Common soft inquiries

• Checking your credit score on Credit Karma

• “Pre-qualified” credit card offers

• “Pre-qualified” insurance quotes

• Employment verification (i.e. background check)

Keep in mind, there are other types of credit checks that could show up as either a hard or soft inquiry. For example, utility, cable, internet and cellphone providers will often check your credit.

If you’re unsure how a particular inquiry will be classified, ask the company, credit card issuer or financial institution involved to distinguish whether it’s a hard or soft credit inquiry.

How to dispute hard credit inquiries

We recommend checking your credit reports often. If you spot any errors, such as a hard inquiry that occurred without your permission, consider disputing it with the credit bureau. You may also contact the Consumer Financial Protection Bureau (CFPB) for further assistance.

This could be a sign of identity theft according to Experian, one of the three major credit bureaus. At the very least, you’ll want to look into it and understand what’s going on.

Keep in mind, you can only dispute hard inquiries that occur without your permission. If you’ve authorized a hard inquiry, it generally takes two years to fall off your credit reports.

How to minimize the impact of hard credit inquiries

When you’re buying a home or car, don’t let a fear of racking up multiple hard inquiries stop you from shopping for the lowest interest rates.

FICO gives you a 30-day grace period before certain loan inquiries are reflected in your FICO® credit scores. And FICO may record multiple inquires for the same type of loan as a single inquiry as long as they’re made within a certain window. For FICO scores calculated from older versions of the scoring formula, this window is 14 days; for FICO scores calculated from the newest versions of the scoring formula, it’s 45 days.

Similarly, the VantageScore model gives you a rolling two-week window to shop for the best interest rates for certain loans. “That way, they only impact your credit score once,” the company says.

Bottom line

Your credit scores play a big role in your financial well-being. Before applying for credit, take time to build your credit scores. With stronger credit, you may improve your chances of being approved for the financial products you want at the best possible terms and rates.

To help you keep track of hard inquiries that may influence your credit scores, check your credit report from TransUnion at Credit Karma. While one hard inquiry may knock a few points off your scores, multiple inquiries in a short amount of time may cause more damage.

How To Ask For A Credit Limit Increase?

Raising your credit card's limit boosts the credit you can access, but you'll need to figure out how much to request and how to make your case.

Before we get into how to ask for a credit limit increase, let’s review a more basic question:
What is a credit limit?

A credit limit is the maximum amount your credit card issuer will allow you to charge on a single credit account. Pretty simple, right? But what actually happens if you meet or exceed that limit?

If you go over your credit limit, your card issuer may simply decline the transaction. Some card issuers may allow charges that exceed your credit limit, but they typically charge an over-limit fee of up to $25 the first time you go over your limit and up to $35 if you do it again within six months. Heads up: A card issuer can’t charge an over-limit fee unless you’ve agreed to permit over-limit charges on your card.

Spending more than your credit limit may come with other consequences, as well. Your card issuer may decrease your credit limit if you’re a repeat offender, and your required payment may increase because you’ll have to pay the amount you spend over your limit in addition to your minimum payment.

Common question:

How do credit card issuers determine my credit limit?

A credit card issuer will assess your credit history, income and how much existing debt you have. They will set your credit limit based on those and other factors. Typically, the better your credit history, the higher your credit limit will be.

The good news? Your credit limit can also swing the other way. In some instances, if you’re a responsible spender and routinely pay off your balance on time, the card issuer might automatically raise your credit limit even if you didn’t ask for an increase.

But card issuers don’t always automatically increase your credit limit. If you want a credit limit increase, most of the time you must be proactive. This means calling your card issuer and explaining why you deserve an increase to your credit limit.

Sound intimidating? Don’t worry. We’ve put together a step-by-step guide for how to ask for a credit limit increase. Check it out below.

How to ask for a credit limit increase

1. Ask yourself why you want a credit limit increase

2. Know your credit history

3. Gather the documents you’ll need when you ask for a credit limit increase

4. Make your case

1. Ask yourself why you want a credit limit increase

If you’re thinking about asking for a credit limit increase on your credit card, the first step is to assess your current financial situation. Consider the pros and cons of a credit limit increase.

On the plus side, a higher credit limit may lower your credit utilization rate if you keep your balance under control, says Bruce McClary, vice president of public relations and communications at the National Foundation for Credit Counseling.

Credit utilization is the amount of available credit you’re using out of your overall credit limits. It’s one of the factors that make up your credit scores. Most experts recommend keeping your overall credit utilization below 30%. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it.

You can figure out your credit utilization rate by dividing your total credit card balances by your total credit card limits. Having a higher credit limit on one or several card accounts can help keep your utilization rate below 30%.

Then again, a higher credit limit could also lead to trouble. A higher limit may lead some to feel that there is that much more room to spend.

As is usually the case, it’s best to spend responsibly and within your means. Just because a higher credit limit may allow you to charge an expensive electronic device or pay for a vacation doesn’t mean that asking for a higher limit is the right option for you.

It’s not a good idea to request a credit limit increase for an impulse purchase, especially if the item is not a necessity. Card issuers may also view applying for a mortgage or auto loan right before requesting a credit limit increase as an indication of a high-risk customer, he notes, because it could indicate that you’re about to take on a large amount of debt.

2. Know your credit history

This is one step we can definitely help with. Get your free VantageScore credit scores and reports from two major credit bureaus at Credit Karma to help figure out your next move. And don’t worry — checking your credit scores on Credit Karma is a soft inquiry, which will never affect your credit.

Heads up, though: When you request a credit limit increase from your credit card company, it may perform a hard inquiry to determine your eligibility. This can affect your credit scores. A hard inquiry from a credit limit increase request is a normal part of the process of applying for new or additional credit.

A hard inquiry remains on your credit reports for approximately two years and may impact your credit scores for one year or more depending on the scoring model used. The impact can vary widely depending on the rest of your credit. For example, if you don’t have very much credit history established, a hard inquiry may impact you more.

For example, one hard inquiry may not affect your credit scores at all or it may decrease your scores by less than five points. On the other hand, if you have only a few accounts or a short credit history, hard inquiries can have a greater impact on your scores. That’s why you should know your credit history before you ask for a credit limit, especially if you’re expecting additional hard inquiries from any other credit requests.

So, how much will asking for a credit limit increase hurt my credit scores?

One hard inquiry resulting from your credit limit increase request will typically only result in a minor dip in your credit scores. There are many different types of scoring models, so a person doesn’t have just one credit score. Credit scoring models are proprietary, so it’s impossible to know exactly how many points a credit score will change as a result of a hard inquiry.

3. Gather the documents you’ll need when you ask for a credit limit increase

Your card issuer may want to know your current annual income, employment status and how much you pay for housing each month. Have that information ready to go before you call.

That’s right, we said call. You can sometimes ask for a credit limit increase by applying on your card issuer’s website, but you’ll have a better opportunity to ferret out information if you speak to a representative on the phone.

If you request an increase over the phone, you’ll be able to talk to the representative and ask questions or see if there’s an amount of additional credit you could get without a hard inquiry, so that may be better in certain situations.

4. Make your case

When asking for a credit increase, it’s a good idea to stick to the basics, says McClary. Keep the request simple and straightforward.

Here are some tips for how to go about it.

• Have your talking points prepared beforehand, such as why you want the increase and how much of an increase you’d like.

• Make a list of questions you want answered before committing to the request. For example, will you be able to ask for another credit limit increase later if you want one? Will this request result in a hard inquiry on your credit reports?

• Be polite and explain why you’re asking for a credit limit increase. Don’t lose your cool if things aren’t going your way or if the representative has an attitude. Instead, consider getting off the call and trying again later with a different agent.

• If you don’t succeed, ask why. You’ll want to know the exact reason the increase was denied so you can work on creating a situation where you’re more likely to be approved. If you’re juggling too many high balances, for example, create a plan to pay them down. Once you’re in a better position, you can try again.

Most of the factors that will determine success are determined before the conversation begins, says McClary. “What you say may not increase the likelihood of approval if you are working against a low credit score or a poor payment history with that creditor.” Still, saying the right things certainly won’t hurt your case.

If you get a credit limit increase, you may improve your credit scores by lowering your credit card utilization rate and keeping the balance low. At the same time, having more credit available could be so tempting that you end up with more credit card debt than you can comfortably pay off. If you’re careful to not take on more than you can handle, a higher limit allows you to make large purchases more efficiently, possibly racking up more rewards points along the way.

Before you ask for a credit limit increase on your credit card, first assess your current financial situation. Be honest with yourself about why you want a higher credit limit. Then, if you still think a credit limit increase is in your best interest, contact your card issuer and make your case.

6 Ways To Lower Your Credit Card Utilization

Your credit utilization rate, the amount of available credit you use at any given time, is one of the most important factors in determining your credit scores. Here are ways you can lower it.

You’ve heard you should keep your credit card utilization under 30%. Here’s why it’s important and how you could do it.

Your credit utilization— the percentage of your credit limit that you’re using—is one of the most important factors in determining your credit scores. Because a high utilization rate could indicate you’ll have trouble paying your bills on time, a lower utilization rate is generally best for your credit scores.

There are several ways to change your balance or available credit. This can help you improve your credit utilization rate and your credit as a result.

1. Pay down your balance early.

2. Decrease your spending.

3. Pay off your credit card balances with a personal loan.

4. Increase your credit limit.

5. Open a new credit card.

6. Don’t close unused cards.

Credit card utilization rates (also known as credit utilization ratios) are relatively simple to calculate. First, look for the credit limit on your credit card account. Then divide the balance on your monthly statement by your credit limit, and that’s your credit utilization rate.

So, if you have a $5,000 credit limit and spend $1,000 during your billing period, your credit utilization rate will be 20% ($1,000 divided by $5,000 – multiply that number by 100 get the percentage.)

If you have several credit cards, you can combine the balances and divide that number by the combined credit limits to find your overall credit utilization rate.

Lowering your credit utilization rate could be a great way to boost your credit.

Unlike some other credit score factors, “utilization is a powerful tool for improving your credit in a short time frame,” says Sarah Davies, senior vice president of analytics, research and product management at VantageScore.

It can take months or years for your scores to recover after a late payment or bankruptcy. However, “if you could pay down all your credit cards in one month, your credit could improve dramatically,” Davies says.

Whether you’re looking for a quick boost or want to learn how to sustain good credit, here are six ways to lower your credit utilization rate.

1. Pay down your balance early.

One tricky point about credit card utilization rates is that your usage depends on the balance that your card’s issuer reports to the credit bureaus, not how much you spend each month. Those two numbers aren’t always the same.

Also, your issuer may not even report to all three of the major credit bureaus, Equifax®, Experian® and TransUnion® — and in some cases, it may not report to any of them.

Typically, issuers report the balance at the end of your billing cycle.

However, some issuers may send the data at the same time each month for all cardholders, regardless of when your billing cycle ends. Your best bet may be to ask your issuer so you can be certain.

What this means is that your issuer may report your billing cycle’s balance before you pay it off. This reported balance will add to your credit utilization.

However, if you pay down part, or all, of your balance before issuers report your balance for the billing cycle, your credit utilization rate for that card will go down.

2. Decrease your spending.

If you’re working to pay down credit card debts and can’t afford to make partial or full payments early, it can be helpful to stop using your credit cards to make purchases. Otherwise, your new purchases may offset your payments, and your credit utilization rate won’t go down.

Switch to a debit card or cash for your regular purchases, and as you make credit card payments to pay off debt, your credit utilization rate could drop.

3. Pay off your credit card balances with a personal loan.

Because credit utilization rates are a reflection of how you use revolving credit, you could take out a personal loan, pay off your credit cards and effectively move the debt to an installment loan (potentially with a lower interest rate than your credit cards). 

Common Question:

What is an installment loan?

An installment loan is a loan that you repay with a set number of scheduled payments over time. Types of installment loans include auto loans, mortgages and personal loans.

However, there are multiple drawbacks to this approach. You’ll need to qualify for the loan and may have to pay an origination fee on the money you borrow.

And to qualify for the best interest rates on a personal loan, you need to have excellent credit (in addition to other factors). If you have average or poor credit, the interest rate on the personal loan may be higher or lower than that on your credit card(s).

4. Increase your credit limit.

Another way to improve your credit utilization rate is to increase your credit limit.

You can call your credit card’s issuer to request a credit limit increase, or you may be able to make the request online. Your card’s issuer may have criteria you need to meet, such as having your account for a specific period of time.

The lender will likely also base its decision on your usage and payment history with the card – so if you have a history of late payments, you’re unlikely to be approved for a limit increase.

Requesting a credit limit increase can result in a hard inquiry, even if the issuer doesn’t approve your request. The inquiry could ding your credit slightly depending on the rest of your credit, although this impact can vary widely depending on the rest of your credit. For example, if you have little credit history, a hard inquiry may impact you more.

5. Open a new credit card.

Another way to increase your available credit is to open a new credit card.

You won’t necessarily know what the credit limit will be until after you’re approved because it depends on the issuer’s consideration of multiple factors, such as your income and credit history. Some cards may have a minimum credit limit.

For example, some Visa Signature® and World Elite Mastercard® cards have a minimum $5,000 credit limit. But even with these types of cards the minimum limit can depend on the card or issuer and you won’t necessarily get a high credit limit.

As with requesting a credit limit increase, applying for a new card generally results in a hard inquiry regardless if the issuer approves your application.

6. Don’t close unused cards. 

As you take steps to get your credit in order, you may want to clear out financial clutter by closing credit cards that you don’t often use.

While this could make managing your wallet easier, closing an account can also lower your available total credit and increase your credit utilization rate.

Managing your credit utilization rate can be a simple way to help improve and maintain your credit. Focus on both parts of the equation — your balance and your credit limit — and look for ways to decrease and maintain a low ratio for the best possible impact.

While recovering from a late payment or another derogatory mark can take months or years, lowering your credit utilization rate could result in a quick, significant improvement in your credit.

Does Checking Your Own Credit Score Hurt Your Credit Score?

Credit can be a confusing concept. But if you want to understand your credit scores, you can start by focusing on high-impact factors like your credit card utilization, payment history and any derogatory marks on your reports.

According to TransUnion’s July 2017 credit literacy survey, a lot of people think so. Of the 1,002 U.S. consumers included in the survey, nearly half thought that checking your own credit scores has the same effect as when a lender checks them.

Fortunately, this isn’t the case. As many know, checking your credit scores on Credit Karma is reported as a soft inquiry and it won’t negatively impact them.

But that got us thinking: What other questions or misconceptions do people have about credit? The factors that actually make up a credit score may be a lot different from what you think.

Let’s dig a bit deeper.

What’s in a credit score?

Below are the factors that are typically used to calculate your credit scores, by the level of impact they can have on your scores. Because there are different credit scoring models, how factors are weighted can vary slightly from model to model.

High impact

Credit card utilization: This refers to how much of your available credit you’re using at any given time. It’s determined by dividing your total credit card balances by your total credit card limits.

Most experts recommend keeping your overall credit card utilization below 30 percent. Why? Because lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too much on it. Individuals whose credit card utilization soars above 30 percent may be more likely to fail to repay their loans than those who keep their balances low.

Another benefit of keeping your utilization low? Having available credit can help if something unexpected arises which you then have to pay for.

Payment history: This is represented as a percentage showing how often you’ve made on-time payments. Paying bills on time shows lenders and creditors that you’re reliable and more likely to pay back your debts.

Late or missed payments can significantly harm your credit scores, so it’s important to try to pay all your bills on time.

Derogatory marks: As of July 1, 2017, about half of all tax liens and nearly all civil judgments have been removed from consumers’ credit reports. That’s good news, because having those derogatory marks on your reports can lower your credit scores. Other derogatory marks that may affect your credit include accounts in collections, bankruptcies and foreclosures.

Medium impact

Age of credit history: This factor shows how long you’ve been managing credit. It doesn’t refer to — as some may think — your actual age.

While your average age of accounts isn’t typically the most important factor used to calculate your credit scores, it’s important to think about. Closing your oldest credit card account, for example, could end up negatively impacting your scores.

To sum up: The longer you manage your credit responsibly, the more you demonstrate your creditworthiness to lenders.

Low impact

Total accounts: This refers to the number of credit cards, loans, mortgages and other lines of credit you have.

Lenders generally like to see that you have used a mix of accounts on your credit responsibly. It generally shows that other lenders have trusted you with credit.

Hard inquiries: Hard inquiries usually occur when you apply for a new line of credit, such as a loan, credit card or mortgage, but can also take place when, for example, you rent an apartment.

A lot of hard inquiries on your credit reports within a short time period may suggest that you’re desperate for credit or aren’t getting approved by other lenders.

Hard inquiries can slightly lower your credit scores. It might seem counterintuitive: To build your credit, you need lines of credit — so why should your credit scores take a hit because you applied for a new account?

Some experts say that any time you take on a new credit obligation, there’s an element of risk involved. Credit models see that and want to understand if you’re able to handle that new obligation.

After you’ve made on-time payments for a few months, the impact of that hard inquiry should go away or diminish, experts say.

What Is A Good Credit Score?

There’s no one definition of a good credit score. That’s because there are several different credit scores that depend on different scoring models with different score ranges, and different lenders have their own standards for rating credit scores.

That being said, scores starting in the high 600s and up to the mid-700s (on a scale of 300 to 850) are generally considered to be good.

How A Good Credit Score Can Help You

A credit score is a numeric representation, based on the information in your credit reports, of how “risky” you are as a borrower. In other words, it tells lenders how likely you are to pay back the amount you take on as debt.

Credit scores are one piece of the puzzle that lenders look at to determine whether or not to lend to you. A good credit score can help you get access to a greater variety of loan offers. And if a lender approves your application for credit, a good or excellent credit score can help you qualify for lower interest rates and better terms.

In general, the higher your scores, the better your chances of getting approved for loans with more-favorable terms, including lower interest rates and fees. And this can mean significant savings over the life of the loan.

Having a good score doesn’t necessarily mean you’ll be approved for credit or get the lowest interest rates though, as lenders consider other factors, too. But understanding your credit scores could help you decide which offers to apply for — or how to work on your credit before applying.

Credit Score Ranges

There are many different credit-scoring models, and each one uses a unique formula to calculate credit scores based on the information in your credit reports. Even the best-known credit-scoring companies, FICO and VantageScore, have multiple credit-scoring models that produce different scores. (Credit Karma offers free VantageScore 3.0 credit scores from Equifax and TransUnion.)

But while there are many different credit scores, the most common models all use a scale ranging from 300 to 850. Within this scale, there are some general credit score ranges that can help you interpret what your scores mean.

Here are the credit score ranges to be aware of and what they mean for you.

Poor credit scores: 300 to low-600s

Having poor credit scores can make it difficult to get approved for a loan or unsecured credit card. But a poor credit score isn’t a financial dead end. Certain financial products, like secured credit cards, can help people who are working on building their credit. These products can be a helpful stepping-stone to accessing credit with better terms — if you use them carefully.

Be aware of potential fees and higher interest rates with credit-building products. And make sure the issuer or lender reports to the three major consumer credit bureaus — Equifax, Experian and TransUnion — so that important actions, like when you make on-time payments, can contribute to your scores.

Fair To Good Credit Scores: Low 600s - mid 700s

While you’re comparing your options, know that applying for a new loan or credit card may result in a hard inquiry, which can have a negative impact on your scores. Loans with preapproval or prequalification options can give you an idea of the terms you might qualify for ahead of time.

Very Good And Excellent Credit Scores: Above Mid 700s

People with top credit scores are the most likely to be approved for loans and credit cards with low interest rates and good repayment terms. But having very good or excellent credit scores doesn’t mean you’re a shoo-in for every loan or credit card out there. A lender could deny an application for another reason, like a high debt-to-income ratio.

Regardless of your scores, it’s a good idea to keep an eye on your credit reports so that you’ll know what lenders will see once you apply for a loan.

What Is The Highest Credit Score You Can Get?

There are lots of different credit scores with different ranges out there. But for the major consumer credit scores, generally the highest credit score you can get is 850.

Keep in mind that perfect credit scores may not be necessary to qualify for great rates on loans and mortgages. Once you’re in the “very good to excellent” range, you likely won’t see much of a difference in terms of interest rate offers from, say, a 790 to an 840. Moving from a 650 to a 700 will likely have a more significant impact, which is why the general credit score ranges are important benchmarks to consider.

How Good Should My Credit Scores Be…

To Buy A House

With today’s market, you can purchase a home with a credit score as low as 620, which is the lower end of the “good” credit range. But credit requirements vary depending on your state.

To Rent An Apartment

Prospective landlords may run a credit check before you can sign a lease, but there’s no single credit score benchmark you need to hit to be able to rent an apartment. It can depend on the factors the landlord is looking for in a tenant, as well as where you’re looking to rent.

To Get Approved For A Credit Card

It’s possible to get approved for a credit card with poor credit — or even no credit at all. Once you know what range your credit scores fall into, you can research cards that suit you and your goals.

If you have no credit, look for secured cards or cards for beginners (like student cards). If you have limited or poor credit, secured cards or cards advertised for building or rebuilding credit could be a helpful leg up. Once you’ve improved your credit, you may be able to qualify for more-enticing offers, such as rewards cards or balance transfer cards.

To Get Approved For A Car Loan

You may be able to get approved for a car loan with a poor credit score, but it could be more difficult to find one to qualify for, and you could face high interest rates. If you’re still working on your credit and can’t wait to take out a car loan, consider asking a trusted family member or friend to act as a co-signer, or see if you can put down a larger down payment.

Good credit scores can mean better terms, but it’s still worth comparison shopping.

FAQs

How do I get a good credit score?
Building a good credit score can take time. Here are some general practices we recommend that can help you stay on the right track.

• Check your reports. Knowing your scores and being aware of what’s on your credit reports is the first step to working on your credit. You can check your credit reports from Equifax and TransUnion for free on Credit Karma. Credit Karma also offers free credit monitoring.

• Pay on time. Your payment history is a major factor in your credit scores.

• Pay in full. Keeping your credit card balances low can not only save you money on interest, but can also help keep your credit utilization rate down. Your credit utilization rate is how much of your available credit you’re using. A good rule of thumb is to keep it below 30% of your total credit limit.

• Don’t close old credit accounts. A longer credit history can help increase your credit scores by showing that you understand credit and have been using it for a long time. Keeping your oldest accounts open can ensure that your overall credit history continues to age.

• Consider your credit mix. Your credit mix reflects the different types of credit you have on your reports, from credit cards to student loans. We don’t recommend applying for a loan just to get another type of credit account on your reports, but it’s good to know that this can factor into your scores.

How long does it take to get a good credit score?

It depends on where you’re starting from and what challenges you’re facing. But building good credit probably won’t happen overnight.

If you’re brand new to credit, it could take months of using beginner products like secured cards to make significant progress in the types of financial products you qualify for. If you have dings on your credit reports, like late or missed payments or a bankruptcy, it could take years for those derogatory marks to fall off and stop affecting your scores.

But even if you have years left before those derogatory marks officially fall off, you can still see significant progress. The important thing is to work steadily toward getting your credit in good shape and understand that building credit is a journey.

How do I find out what my credit scores are?

You can get your scores from Equifax and TransUnion for free on Credit Karma. Checking your own scores won’t hurt your credit. And you’re entitled to free credit reports from Equifax and TransUnion each year with details about important credit factors so that it’s easy to track your progress.

What Is An Interest Only Mortgage?

In an interest only mortgage, the borrower covers interest on payments for a specific period of time, paying the cost of borrowing money up front, while the principal remains unchanged. This allows for reduced monthly mortgage payments early in the loan term. An interest only home loan can offer flexibility to buy a more expensive home than a borrower initially qualifies to buy. They can also be a great way to lower payments so you can divert your cash flow toward retirement, college tuition or a rainy day fund.

In traditional mortgages, payments are applied to both interest and principal. Through amortization the balance of the loan decreases over the term of the loan. Interest only mortgages are structured differently: The most common version pushes back the amortization schedule, usually 5 to 10 years, while the borrower pays interest only. The other type lasts the duration of the loan, with an agreement principal that will be settled with one balloon payment at the end of the term.

While initial payments as part of an interest only mortgage are lower, borrowers should be aware that over the life of the loan they are more expensive than traditional mortgages. Interest only loans can also be subject to adjustable interest rates. Negative amortization, a feature where missed interest payments are applied to the principal balance, is also a risk inherent to interest only loans. Keep reading to learn more and explore the circumstances that make the most sense to purse an interest only loan.

Is an interest only mortgage right for you?

Here are five questions to help you determine whether an interest only mortgage is the perfect match:

• Are you confident your income will grow in the future, but want to purchase high-value real estate now?

• Are you more interested in lower monthly mortgage payments than building home equity?

• Are you looking to invest your money in something other than your home?

• Are you fine with the prospect of your monthly mortgage payment going up when the interest-only term ends?

• Do you own investment homes and rent them out?

If you answered “YES” to any of these questions, an interest only mortgage might be your best bet! A word of consideration—while interest only home loans offer low monthly payments during the initial term of your loan, your monthly payments will rise after this term ends to cover the principal. If you don’t expect your income to increase in the foreseeable future or if you’re unsure you’ll be able to make the larger payments later on, a 15 or 30-year fixed rate mortgage could be a better fit. In addition, it may be more difficult to refinance your mortgage if your home value doesn’t increase during the lifetime of your loan. Those buying a home for the first time may find interest-only mortgages particularly beneficial. For new homeowners, who are unaccustomed to the higher cost of mortgage payments and the other costs of maintaining a home, the first years of home ownership can be particularly challenging. In many cases, you are buying a house you expect to pay off years down the line, when you are more established and may be making more money, thus the initial costs may seem daunting. If a water heater suddenly needs replacing or a roof suddenly needs to be fixed, the option to exercise an interest only mortgage at that time can come in handy, as long as you are able to cover the higher monthly payments later on.If your income is subject to fluctuation either because of freelance work or commissions and bonuses, rather than a typical flat salary, an interest-only mortgage can be similarly beneficial. Pay interest-only payments during leaner months and years with the anticipation of paying more later on. Risks of interest only payments. Making a smaller monthly payment for a period of time, with the anticipation that you’ll have the money to make larger payments down the line, always carries a risk. The total balance of what is owed on your mortgage is not changing, thus if your financial circumstances do change you may find monthly payments more difficult down the line. Additionally, the housing market can be fickle and the property purchased may fail to appreciate in value. Even if the value remains much the same, if the borrower has negative amortization you may wind up owing more on the mortgage than the actual value of the house making it difficult to make a profit on the house when and if they decide to sell. How much is an interest only payment?

When considering an interest only mortgage, do the math to figure out if you're able to handle the amount of the monthly payment. Figuring out the monthly interest only payment on your mortgage is easy. Say that the unpaid loan balance on your property is $400,000 with an interest rate of 7%. Multiply those numbers together for an annual interest of $28,000. Divide that number by 12 months and you can find your monthly interest payment: $2,333. Keep in mind that after the interest-only period, your payments will increase as you begin to pay back the loan principal.

What Is A VA Loan?

What is a VA home loan?

The US Government's VA loans program helps veterans, active-duty service members and their families qualify for a home loan. Though they are issued by private lenders like Guaranteed Rate, VA home loans are backed by the US Department of Veterans Affairs. Created during World War II to help returning service men and women purchase homes, this program has guaranteed over 22 million VA loans since 1944.

VA home loans feature no down payment or private mortgage insurance (PMI) requirements, making them a great choice for any veteran or active service member looking to purchase a home. Since the housing market collapse of the 2000s, VA home loans have become even more critical in the wake of stricter lending requirements. For this reason, a guaranteed VA loan is often the best and easiest way for veterans to purchase a home of their own.

What are VA home loan requirements?

A VA loan is a no-brainer for qualified homebuyers and refinancers. The intended candidate is a service member or surviving spouse with a clean financial record. Ask yourself these four questions to determine if you meet the minimum VA home loan requirements:

• Are you a current or ex-military personnel?

• Are you the surviving spouse of a current or ex-military personnel?

• Have you defaulted on a home loan within the last 12 months?

• Have you declared bankruptcy within the last two years?

If you answered "YES" to either of the first two questions and a resounding "NO" to questions three and four, you most likely meet the basic VA home loan requirements.

Other VA home loan requirements have to do with military service time. Specifically, you must have serve for 90 or more days in wartime or 181 or more days in peacetime. In both cases, the stipulation is waived if you are discharged due to a service-related disability. Reserves and National Guard soldiers must serve for at least 6 years to be eligible.

Spouses of deceased service members are eligible for VA loan benefits, provided they have not remarried and that the deceased either:

• Died in service or from a service-related disability.

• Was missing in action or a prisoner of war for at least 90 days.

• Was rated totally disabled and was eligible for disability compensation at the time of death.

Children of deceased veterans are not eligible for VA loan benefits.

The VA loan home advantage

VA loans are fully backed by the government and offer a myriad of advantages for your home purchase or mortgage refinance. Here are the six biggest:

No money down

While conventional loans generally require down payments that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement. The VA allows you to purchase jumbo loans, but requires you to supply 25% of the difference between the loan amount and the loan limit.

No PMI

Private Mortgage Insurance (PMI) is a requirement when you put less than 20% down on the purchase of a home and typically adds 0.2-0.9% of expenses to your monthly mortgage. With a VA loan, you can wave goodbye to PMI!

Competitive interest rates

Since VA loans are guaranteed by the federal government this can provide lenders with a greater sense of safety and flexibility. This can ultimately lead to a more competitive interest rate than you may otherwise receive.

Easier to Qualify

Similarly to the interest rates, the VA loan being backed by the government also lets the banks assume far less of the risk. This can lead to less stringent qualification standards, once the aforementioned qualifications are met.

Fewer credit restrictions

Reduced restrictions mean easier qualification. With a VA loan, you’re allowed a higher debt-to-income ratio and afforded more leniency with your credit score.

Seller assistance

The VA allows sellers to assist with up to 4% of closing costs.

Easy refinance

Borrowers can refinance their homes with a VA streamline or cash-out loan. The streamlined version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.

What Is An FHA Loan?

FHA home loans are mortgages insured by the federal government through the Federal Housing Administration (FHA), a branch of the Department of Housing and Urban Development. FHA home loans reduce the barrier to entry for homebuyers and refinancers by featuring low down payments, flexible credit requirements and more purchase power. If funds are limited, an FHA home loan can help you finance more than 80% of your home value.

What are FHA loan requirements?

In order to ensure that you meet the minimum FHA loan requirements, you need to consider the following factors.

• Are you over the age of 18?

• Do you have a valid Social Security number and lawful residency in the United States?

• Do you have a steady employment history? If not, have you at least worked for the same employer for the past two years?

• Can you afford the minimum down payment of 3.5% or 10% (depending on credit score)?

• Do you have a credit score above 620?

• Have you been out of bankruptcy for at least the past two years?

• Will this home be your primary residence?

You’ll likely need to be able to answer all of these questions with a hearty ‘YES’ in order to meet FHA home loan requirements.

The FHA home loan advantage

FHA home loans are backed by the federal government and offer you a myriad of advantages for your home purchase or mortgage refinance.

Minimum down payment option of 3.5% for qualified buyers

For those with credit scores of 620 and above, the down payment for an FHA loan is 3.5%. (For those with credit scores below 620, a 10% down payment is required.)

Easier to qualify

FHA requirements are, typically, less strict than typical loans. Although a credit score below 620 does not allow you to take advantage of the 3.5% down payment option, conventional lenders require a minimum credit score of 620 or higher.

No maximum income restrictions

Seller assistance with up to 6% of closing costs

FHA home loans allows the seller to pay up to 6% of the closing costs, including any costs of the appraisal, title expenses and a credit report.

203k renovation loans with a minimum 620 FICO score.

If you need extra cash to repair or renovate your home, FHA offers 203(k) loans that offer you loans based not on the current appraised value of the home, but the projected value after these renovations would take place. The extra money you receive from the loan after the purchase of the home can then go towards these renovations. This can be used to cover painting, roofing, plumbing, heating and air-conditioning and full room remodels. This is generally only eligible for those with a credit score of 620, more along the lines of a minimum credit score for a conventional loan.

Loan limits adjusted annually

FHA home loans have a maximum loan amount (or “ceiling”) that is regularly adjusted every year and vary according to the cost of living in a given area. This annual adjustment increases your likelihood of getting an FHA home loan that meets your current needs.

With an FHA loan, you can use borrowed money and other gifts from family members to cover down payments and closing costs. And don’t worry about prepayment penalties! An FHA loan lets you refinance or pay off your home early without having to deal with extra fees or other sticking points. As long as you meet FHA requirements, an FHA home loan may be within your future!

What Is A Jumbo Loan?

A non-conforming jumbo mortgage can help you purchase a lot of real estate. This mortgage is needed for loan amounts over the conforming loan limit of $484,350 and $726,525 in high-cost areas. If you need to take out a loan over the conforming limit, a fixed or adjustable rate jumbo mortgage could be your ticket to a big and beautiful home.

View Today's Jumbo Mortgage Rates

There is, however, one key difference: Jumbo loans are ineligible for purchase by Fannie Mae or Freddie Mac and must be sold in the secondary market. What does this mean? Jumbo loans can require more stringent credit guidelines and larger down payments than conforming loans.

Is a jumbo mortgage right for you?

Can you afford high-value real estate but don’t have enough saved up to bring a loan down to the conforming limit? A jumbo mortgage can help you make your move! If your financial situation is on the upswing, a jumbo loan can be a good way to bypass a starter home and purchase the full-sized home of your dreams.

Jumbo loan features

A jumbo mortgage is a great way to rapidly build your credit. On-time payments will improve your score by leaps and bounds. One important note—it may be more expensive to refinance a jumbo loan due to higher closing costs.