If you’re like a majority of Knoxville first time home buyers, you’ll likely need a mortgage to get into your first home. In order to get a mortgage, you’re going to need good or at least decent credit. Here are 3 easy ways Knoxville first time buyers ruin their credit and how you can avoid them.
Missed Or Late Payments
One very easy way Knoxville first time buyers often ruin their credit is by missing or having late payments. After a payment is 30 days past due, it’s considered delinquent. At that point, the missed payment will show up on your credit report and ding away at your score until it is paid. If that payment stays late for 90 days, it will be considered a major delinquency and remain on your credit report for 7 years after being paid off.
How to avoid this: Make your payments on time, every time. The best way to not miss payments is to ensure that you’re not overextending yourself financially.
Overextending Your Credit
You may have a $20,000 credit limit, but that doesn’t mean you should use up every penny of that credit limit. Generally, it is best to utilize less than 10% to 30% of your overall credit limit. And, it’s generally best to be on the smaller end of that spectrum by using around 10% of your overall credit limit.
How to avoid this: Be very careful about managing your credit limit. Be sure your credit cards get paid off monthly. If you have a low limit, use your credit card for certain monthly expenses, like only groceries or gas.
Having No Credit At All
There are some Knoxville first time buyers with no established credit at all. While this doesn’t make it impossible to buy a Knoxville home, it can make things more difficult. It can be great to have absolutely no debt to your name, but it’s important to have credit for things like getting a car loan or buying a house.
How to avoid this: Establish credit by getting some bills in your own name, but those won’t necessarily report to the credit bureaus. It can be helpful to get a credit card through your local bank to help establish yourself some credit.
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