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How to Get a Mortgage After Chapter 7 Discharge

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You’ve likely heard that a bankruptcy sits on your credit report for up to seven years. While that’s true, it doesn’t affect your ability to get a mortgage that entire time. In many cases, you can get a mortgage in as few as two years after a Chapter 7 discharge.

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Just how do you do it? Keep reading to learn the steps you should take.

Build Your Credit Again

First, you need to build your credit up again. A Chapter 7 bankruptcy wipes the slate clean. While that is great for your finances, it’s not great for when you apply for another loan. You need a credit history – a positive credit history.

Right after the Chapter 7 discharge, start building your credit. It sounds odd, why would you take on new debts after getting out of debt, but it’s important. Don’t jump in headfirst and drown in debt again. Instead, take it slow.

Start with a secured credit card. You may only get a credit line of a couple hundred dollars, that’s okay. Take it and use it. Don’t keep a balance, though. Pay the credit card every month. Charge expenses you normally pay anyway. Show lenders that you are financially responsible even after filing bankruptcy.

Once you have a secured credit card, apply for an unsecured credit card or personal loan. Get as much good credit going as you can. You want a decent mix of installment debt and revolving debt with good payment histories. This will show lenders that you can manage your finances again.

Get a Good Rental History

Lenders need to see that you can handle a housing payment even after the BK. If you rent, make sure you make your payments on time. Also, have proof of the payments. If you rent from family or friends, keep canceled checks. If you rent from a rental company, have them complete a Verification of Rent form for you. If it shows that you made on-time payments, it will help lenders make a solid decision on your mortgage.

Fix the Problem

While you build up your credit, think about why you filed for bankruptcy. Did you lose your job, fall ill, or just get carried away with your spending? Lenders are going to ask what happened. They aren’t nosy. They want to know what led to the downfall to see if it’s something that could happen again.

If you want to show lenders that you are responsible, show that you’ve overcome the problem that caused the bankruptcy. If you lost your job, the obvious solution is to have another job. Show lenders that you’ve been at the job for at least 12 – 24 months and that you can succeed at it. If you fell ill and got behind, show lenders that you were able to pick up the pieces and get current again.

You may need to put your reasons and solutions in writing. Have as much evidence as you can to help lenders make a solid decision. They want to know that you’ve fully overcome the issue that caused the bankruptcy.

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Apply for a Government-Backed Loan

Your best bet, especially if it’s only been two years since your bankruptcy discharge is to get a government-backed loan. Most borrowers take out an FHA loan. You only need a 3.5% down payment, a 580 credit score and only have to wait two years after your BK discharge. The flexible underwriting guidelines make this loan a great option.

If you are a veteran of the military, you may be able to use your VA home loan benefits. If you didn’t use them before or you were able to keep your home through the BK, you may still have your VA benefit left. If you have enough of a VA benefit to cover the price of the home (up to $484,350), you won’t need a down payment on it. VA loans, like FHA loans, only require you to wait two years after your bankruptcy discharge to get a VA loan.

Shop Around

If you don’t qualify for an FHA loan, shop around with subprime lenders. Don’t let the name scare you. These lenders offer alternative loans that they keep on their own books. This gives them the flexibility of writing their own guidelines. You may find subprime lenders that have lower credit score guidelines or that will overlook your BK. They often make it easier to qualify for a mortgage after a BK.

Even if you qualify for an FHA or VA loan, shop around. Each lender sets its own guidelines and charges its own rates and fees. Because you have a BK in your recent history, lenders will probably charge more money for your loan. Shop around until you find the most affordable option to help you avoid any future financial issues.

Getting a mortgage after a Chapter 7 discharge isn’t as hard as it seems. You just need to put in the legwork and the try to fix as many credit/financial issues as possible before applying. The more positive factors you can show a lender, the more likely it is that you’ll get approved.

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The Top 5 Tips for Shopping for a Mortgage

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As you shop for a mortgage, it’s easy to get overwhelmed. There are so many terms and numbers thrown around, not to mention the decisions you must make. Before you set out to get a mortgage, learn the top things you should know to make it a success.

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Know Your Credit Score and Credit History

Before you shop for a mortgage, you should be an educated borrower. That includes being educated about yourself. Do you know your credit score? Do you know what your credit history looks like? If not, now is the time to look.

You can get a free copy of your credit report from www.annualcreditreport.com. This will give you your credit history, not your score. Go over the report. Look for any inaccuracies. Do all of the accounts belong to you? Is all of the payment information correct? If anything is incorrect, address it with the reporting credit bureau and reporting creditor right away. It may take some time to get it fixed.

Also, look at your trade lines. Do you have late payments? Take the time to bring the accounts current. Do you have too much credit outstanding? Try to pay your balances down. The more you improve your credit history, the higher your credit score will get. If you want to know your actual credit score, check with your credit card companies or bank, they usually offer free access to your credit score.

Get Pre-Approved

All buyers, whether first-time buyers or not, should get pre-approved before shopping for a home. The pre-approval lets you know a few things:

  • How much loan you can borrow
  • The maximum purchase price you can afford
  • The loan program you qualify for
  • The loan’s terms

A pre-approval also helps when dealing with sellers. Many sellers won’t show you their home unless you are pre-approved. It’s the only way to know that you are a serious buyer. Without the pre-approval, you could be a nosy neighbor or someone that thinks they can buy a home, but may not be able to afford it.

We suggest getting quotes from at least three lenders when you get pre-approved. This way you have at least three loans to compare to one another and decide which one is right for you.

Know All of Your Options

Today you have many options when taking out a mortgage. Government-backed loans, such as FHA, VA, and USDA loans are all flexible options. You also have conventional loans, which have slightly stricter guidelines as well as subprime loans, which vary by lender.

Ask about all loans that you qualify for based on your credit score, down payment, and debt-to-income ratio. This way you can weigh all of your options. Government-backed loans typically have flexible guidelines and require little down payments (some don’t even require a down payment). You may pay a funding fee or annual mortgage insurance for the life of the loan, though.

If you have great credit, low debt ratios, and at least five percent to put down on the home, you may qualify for conventional financing. These loans don’t have a funding fee and only require Private Mortgage Insurance until you owe less than 80% of the home’s value.

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Knowing your options gives you a chance to determine which loan costs the least now, as well as over the life of the loan. Don’t just take the loan with the lowest interest rate – look at the big picture to decide which loan is right.

Don’t Take Out New Credit

The last thing you should do is apply for new accounts when you are ready to shop for a mortgage. Lenders look at your credit history, your current outstanding credit, and any current inquiries. They’ll know if you took out new credit. Even if you have a lot of inquiries, but no new credit, they’ll be hesitant to give you a loan.

A flurry of new inquiries means that you are desperate for money. If the inquiries are less than 60 days old, there could be new loans out there that aren’t reporting on the credit report yet. It’s best to keep your credit as stable as possible before taking out a mortgage. This is even true after you get pre-approved. Lenders will pull your credit again just before the closing. Avoid opening any new accounts, closing old accounts, or even using your current credit card accounts to keep your approval.

Think About the Future

Most people take the first loan that comes to mind – usually the 30-year fixed loan. What if you could afford more, though? What if you could pay your loan off in half the time? A 15-year fixed loan means you pay a lot less interest because you pay the loan off much faster.

Think about your goals. Do you plan to be debt-free before you retire? Plan your term around that time. Do you plan to go from one income to two or two to one in the future? This could also affect the size of the mortgage payment that you take. While you can refinance your mortgage in the future, it’s best to choose the mortgage now that will still work in the long run.

Shopping for a mortgage doesn’t have to be stressful. Set yourself up with the right mortgage the first time by educating yourself on the process. Go into the mortgage process knowing what you want and the best way to get it. This will give you the best outcome for one of the largest investments of your life.

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What Home Loans for Teachers With Bad Credit are Available?

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Teachers with bad credit still have many home loan options. While a high credit score speaks volumes, it’s not the only way to get a home loan. Teachers are eligible for the same loan programsborrowers in any other profession can get. In addition, though teachers may be eligible for some ‘special programs’ that make homeownership more affordable.

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FHA Loans are a Good Fit

Oftentimes teachers with bad credit turn to FHA loans. As long as you have at least a 580 credit score and 3.5% to put down on a home, you may qualify. Teachers can get a home with little money down and as much as a 41% total debt ratio.

FHA loans do charge mortgage insurance for the life of the loan, so keep that in mind. You do have the option to refinance at any point, though. Once you improve your credit score, and owe less than 80% of the home’s value, you can refinance into a conventional loan and ditch the insurance.

If you are a teacher with a credit score between 500 and 579, you may still qualify for an FHA loan. However, you’ll need at least a 10% down payment. You’ll also go through what’s called manual underwriting. Rather than a computer underwriting your loan, a person will do it. That person will go through your file with a fine-toothed comb, so to speak.

With a 500 – 579 credit score, you may need compensating factors. These qualifying factors help make up for the risky credit score. A few examples include:

  • Low debt ratio – If you only have a few debts, you leave more money available to make your mortgage payment. This lowers your risk of default, which lenders like to see, especially with a low credit score.
  • High down payment – Even though FHA loans only require a 3.5% down payment, you can make a larger down payment. Investing your own money shows your desire to be a homeowner and make your payments on time. If you don’t, you risk foreclosure and losing your entire investment.
  • Stable employment – Lenders like reliability and consistency. If you change jobs often, they won’t have that feeling of consistency. If you stay at the same job for many years, though, you show lenders that you are reliable, which lowers your risk of default.

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USDA Loans are Good for Rural Areas

The USDA loan is another government-backed program. You must live in a rural area in order to use this program, though. Your total household income also must not exceed 115% of the average income for the area. You can see if you are eligible here.

The USDA does have slightly higher credit score requirements, though. You need a 640 credit score. But, you don’t need a down payment. You can borrow up to 100% of the home’s value. While the credit score requirements are higher, they aren’t as high as conventional lenders require and you could save money without a down payment requirement.

USDA loans are for modest homes. They do charge mortgage insurance, but it’s only 0.35% of the loan amount each year. On a $150,000 loan, you would pay $43 per month in insurance.

Subprime Loans

Finally, you may want to explore your subprime options. These loans come from smaller lenders in your area that keep the loans on their own books. Subprime lenders create their own guidelines and rules. They can accept low credit scores, high debt ratios, and low down payments. Each lender has their own programs, so shop around to find the one that suits you.

Read the fine print when looking at subprime loans. Make sure you know the interest rate, term, closing costs, and any other terms of the loan. Is the rate fixed or is it adjustable? Will you pay points to get the loan? Is there a prepayment penalty?

The Teacher Next Door Program

HUD also offers the Teacher Next Door Program. It’s an extension of the FHA loan, but it comes with great rewards. Teachers and other service-oriented individuals, such as police officers and firefighters are eligible for this program.

HUD designates specific properties in the area that qualify for the program. They are foreclosed homes in an area that could use a positive influence to boost the economy. If you win the ‘lottery’ to buy the home, you only need $100 down on it. You must have FHA financing and agree to live in the home for at least 3 years. If you do, HUD writes off half of the cost of the home after three years.

This means after three years you could sell the home for its value and make a 50% profit or more. Because you only need FHA financing to buy the home, even teachers with bad credit may qualify.

Teachers with bad credit have many options for home loans. The key is to shop around and see what options are available to you. Get offers from at least three lenders to see which lender/loan program will give you the best deal.

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The Shocking Ways Your Credit Score Affects Your Interest Rate

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Your credit score dictates your interest rate. In general, the higher your score, the lower your rate. The lower your score, the higher rate you get. Lenders use your credit history and score as a way to determine your risk level. Late payments, collections, and defaulted accounts all decrease your score and make you a high risk.

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If a lender decides to give you a loan even with a lower score, they need to make up for that risk. Many lenders charge a higher rate to make up for it. They may also charge more fees on the loan. For example, you may pay an origination fee if your score is too low. Lenders use this as ‘prepaid interest.’ It’s money they make upfront. If you were to default, they at least have the money you paid up front to fall back on.

What’s a High Credit Score?

Here’s where things get difficult. There is no cut and dry answer regarding what credit score is considered high. Every lender has a different take on this. One lender may require credit scores as high as 740 in order to secure the best interest rate. Others may allow lower scores. There are no regulations regarding this – it’s literally up to each lender.

How Much Can Interest Rates Vary?

You might not think it’s a big deal to have the ‘best’ interest rate. How much could the rates really vary? In reality, you could see rates differ as much as 1 ½% from the highest and lowest credit scores. Putting that into perspective, let’s look at a $150,000 mortgage.

  • Borrower A has a 740 credit score and secured a 4.5% rate. Her principal and interest payment equals $760.
  • Borrower B has a score of 620 and secured a 6.0% rate. Her principal and interest payment equals $899

That’s a difference of $139 per month or $1,668 per year. If both borrowers kept the loan for the full 30 years, Borrower A would pay $50,040 less than Borrower B. That’s the importance of a good credit history.

What Else Lenders Look at On your Credit History

Your score is not the only thing lenders focus on when looking at your credit report. The score may be the first thing they look at because it lets them know if your file is worth processing. However, once they get past the score, they look at other factors as well:

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  • A good mixture of account types – If you have a lot of revolving credit, you might be a higher risk. Lenders like to see borrowers that have a mixture of installment debt and revolving debt.
  • Low balances on your revolving debt – You have credit limits and available balances. If your available balance is too low, it means your credit utilization rate is too high. In other words, keep your credit card balances as low as possible. Aim for 30% or less of your credit line.
  • Age of credit – The older your credit accounts, the better. It gives the lender a better idea of how you handle your credit over a long period. If too many of your accounts are too new it can be hard for a lender to judge your risk level.
  • Number of inquiries – If you have too many inquiries on your credit report, you might have new accounts open. Even though they aren’t on your credit report yet, they still affect your chances of getting a mortgage. Don’t apply for any new credit within a few months of applying for a mortgage for the best results.

Fixing Your Credit Score

What if you find out you have a low credit score? Are you stuck with that high interest rate? Luckily, there are things you can do. First, you must withdraw your mortgage application. Talk to the loan officer to see what score they would like to see from you to give you a better rate. Next, you can set out to secure that score. Here’s how:

  • Bring your payments current – Late payments hurt your credit score a lot. Bring all accounts current and then continue to make your payments on time. The more on-time payments you have, the more your score will increase.
  • Fix mistakes – You might be surprised to learn how many mistakes are on your credit report. Go through it with a fine-toothed comb determining what is right and what is an error. Then set out to fix the errors with both the credit bureau and the company reporting the error.
  • Lower your credit utilization rate – Again, the amount of revolving credit you have outstanding determines your credit score. If your utilization rate is too high, pay some of your debt off and allow your score to increase.

Your credit score has a large impact on your mortgage interest rate. You’ll need to talk to your loan officer to see how your score affects your rate. If you don’t like the rate you are provided, you can do one of two things. You can shop around with other lenders to see if someone else will give you a lower rate. You can also withdraw your application and work on your credit. The higher your score, the better the rate you’ll get, no matter which lender you choose in the end.

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Here Are Tips To Change Your Credit Score For The Better

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Adults

Keeping a good credit score has a lot of benefits other than raising your chances of getting your home loan application approved. Some of its benefits could be that it helps you create a good impression toward future employers and it’s safe to say that it does more good for you than you think.

In the case of conventional home loan applications, there are specific credit score qualifications that need to be met in order to get a mortgage. And there are still a lot of applicants that get denied because of their not-so-satisfactory scores. Some would look for other loans with flexible requirements just like FHA loans and non-QM loans.

But if you want to reap its benefits other than loan approval, there are ways to boost your credit scores. Here are some of them:

Reports can have errors and you can definitely do something to correct them.

Getting credit reports regularly keeps you on track on with your score. But mistakes can happen. According to a report from the Federal Trade Commission, 20% of consumers have to dispute and fix the errors they spot on their reports.

As a result, they see a rise in their scores. So it’s good to be very particular about these reports. If you overlook on it, there might be errors you’d miss to correct.

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It’s okay to have one or two credit card accounts.

You would probably ask how something that could potentially add up to your debt would help you improve your credit score. But contrary to that belief, having a credit card line could actually give your score a boost.

This would show that you could be trusted in carrying out debts and paying them on time. Also, sometimes having no credit card could put your score at risk to some degree. Just remember that having one is a responsibility that needs to be fulfilled at all times.

But then there’s a catch.

Yes, getting a credit card is okay. But it doesn’t mean that you just go ahead and swipe your card like it weaves magic. Remember that your ability to pay your debt is what would keep your credit score in good condition.

So don’t overuse your credit card. Make sure you only use them when you need them and make sure that you are being responsible by paying your dues.

Always pay on time.

Payment history plays a big role in your FICO score. If you have a late payment or if you have skipped a payment, that would definitely be reflected in your score.

Nothing spells out “responsible” more than showing your ability to pay your dues on time. Therefore this rule bears repeating as needed. So here it is once more: Always pay your debt on time.

Seek counsel if needed.

Credit counseling doesn’t really do much on your score but if you’re having a difficult time making ends meet, counseling would definitely help your management skill when dealing with your debt.

From there, applying what you have learned from counseling can make wonders towards improving your FICO score.

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The Auto Lending Industry is Tightening Credit, How About Mortgages?

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Slowing demand in cars is causing automakers to cut down production to balance the rise in available inventory. April is the fourth month in a row where automakers report poor sales. Apparently, fewer Americans are buying cars now. But what caused this?

The possibility for disaster

You might be familiar of the subprime auto loan crisis that has recently grabbed headlines. A quarter of the American auto loan debt of $1.2 trillion is lent to high-risk borrowers or those who have not-so-stellar credit scores. As the panic sinks in among lenders, many tried to mitigate disaster by setting stricter guidelines and qualifications on their loan services and products. Now, a third of new auto loan originations are given to borrowers with FICO scores 720 and up.

The tightening of credit, along with the rise in interest rates is making it harder for many potential borrowers to get financing for their vehicle-buying intent. Many are reconsidering their intention to buy new cars, with others just settling for used ones.

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But the question right now is: is the mortgage sector following the auto loan sector’s example?

A new report from the Federal Reserve’s Senior Loan Officer Survey has shown that commercial real estate lending standards tightened in the second half of 2016 following a warning by the Office of the Comptroller of the Currency regarding the easing of loan standards for mortgage originations. An analysis of a sample of fusion commercial mortgage-backed securities spanning the period of 2012 through the first quarter of 2017 also showed a significant drop in LTV (loan-to-value) ratio this year which indicates that commercial mortgage-backed securities lenders are tightening credit as well.

Not again

Remember that the boom of subprime mortgages caused the collapse of the housing market and paved the way for the Great Recession back in 2008. Of course, nobody would want to take that disastrous dive once more. Still, this does not prevent many other private players from taking advantage of the lack in competition. Those who choose to do so are racking up $20.4 billion last year alone, a significant rise compared to $12.2 billion the previous year.

Not plunging into crisis is a collective effort. But in this game of risk and rewards, the intent is always individually-motivated. Are we mature enough as a collective to never make the same mistake twice?

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How Big can a Jumbo Loan be?

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One example of a non-qualified mortgage loan is a jumbo loan. It is called a “jumbo” loan because it surpasses the established conforming loan limits.

During the attempt to define what a conforming loan is, one goal was to establish a limit for the loanable amount. This limit was laid down by the Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac).

In 2017, most conventional mortgage loan are very well within the 424,100 limit. There are a few exceptions for high cost areas such as those in Florida and California. These high cost areas have loan limits exceeding $636,150.

How Big is a Jumbo Loan?

Jumbo loans are, more often, more than half a million dollars. It is intended to finance luxury houses. Most of these properties are located in high cost areas where the real estate market competition is really steep.

Huge Money = Stringent Requirements

In conventional loans, there are standard credit requirements a borrower needs to meet in order to qualify for the loan. Since a jumbo loan is considered a nonconforming loan, it is not backed up by the government should a borrower file lawsuit against the lender. Also because of the huge amount of money involved, the lending institution is taking a greater risk on jumbo loans.

If you are trying to apply for this type of loan, expect to be under stringent underwriting, and tighter credit requirements.

Credit Score

Make sure you have a good credit standing with a score of at least 620. This is considered a fair credit score. But to increase your chances of getting approved on a jumbo loan you will  need a score higher than 720.

Documentation

In the years before the U.S. recession happened jumbo loans were approved with less paperwork required. Many can go away with this loan with very little income verification needed. Much has changed in the recent years.

When the ‘Qualified Mortgage’ loan was defined, it increased the need for standard documentation and verification. While jumbo loans can be considered Non-QMs, lenders are now asking borrowers to provide documentation as proof of their income.

Examples of these are Proofs of income and liquid assets, and proofs of ownership for non-liquid assets.

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Down Payment

With a stellar credit, you may find a one that only requires a 10 percent down payment. This may mean lesser money to put upfront. However, a small down payment may increase your monthly interest rate or affect your loan terms.

Make sure you assess your financial situation and you read the loan agreement first before you decide to pay cash up front.

Debt-to-Income Ratio

Not all jumbo loans are non-QM. Those that fall under the qualified mortgage bracket may have standard DTI requirements. Your DTI cannot exceed 43% for qualified jumbo loans.

If your DTI is way over that cap, a non-QM jumbo loan is what you need. It does not mean though that the lender will not perform a verification if you can afford the monthly payables. There will still be a need for verification.

Income

One big factor that comes into play is income. Because of the huge size of the loanable amount, the income is where lenders find security. Your income and other reserves must be able to cover this big debt. For the self-employed, you may need to provide tax returns and bank statements. For traditional borrowers, pay stubs and W2 be asked from you.

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Why Do I Need to Keep Good Credit?

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Why Do I Need to Keep Good Credit?

It’s become a practical necessity for many Americans to own a credit record and a corresponding credit score. Not only do you use credit for making your purchases, a credit record is also fundamental in helping you get access to various financing resources such as a mortgage or a car loan.

But how deeply could a three-digit number really affect your everyday, economic life? Why is keeping a healthy credit score so important? Let us count the ways.

Determines your housing budget

Majority of Americans don’t have the cash to pay for a house. That is why we go through the hassle of finding a lender, sorting out all the needed paperwork, and applying for a mortgage. Or, we look for a rental property that is affordable and within our budget.

But a big part of actually getting a home to settle into is your credit score. Both the lender and the landlord would want a reliable piece of assurance that you will not default on your housing payments. And the most fundamental, universally-accepted way to prove that is via your credit record.

If you have a good score, you are more likely to get approved. But if you don’t, you better find another option – that is, if you cannot find another alternative to prove your creditability. Your score sometimes also affects the loan amount you can borrow, and the interest that will be carried into your monthly mortgage payments.

So basically, a good score equals more affordable payments. The same goes with the rent.

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Dictates what you drive

What is true for housing is also true for your car loan. If you don’t have the cash to pay it upfront, you need to find a lender who will let you borrow the money to buy the car. The lender looks at your score and if it is satisfactory, they will then dispense the money with a relatively manageable interest rate. If not, such as in the case of individuals with credit scores 620 and below, you might get denied, or be forced into the subprime market with soaring interest rates. If you have good credit, you get access to larger car loans, with better loan terms and options.

A vital consideration when starting a business

Most of the time, it’s not easy to get your ideas out there. You need money to transform your brilliance into a revenue-producing effort. That is why many entrepreneurs seek business funding via small business loans to get their own projects started. But then again, getting approved for such requires having good credit. Business loans usually have stricter requirements so when it comes to having a score below what’s considered prime, you are most likely to pass through a needle point to get the money needed.

Bills, bills, bills!

Most utility services now entail showing your provider a good credit score. That includes all your basic daily necessities that won’t be provided unless you can prove to the providers that you are a responsible payor.

A career requirement

Although not universal, many employers hesitate to hire candidates or applicants without an established credit score. Your score could also be the basis for salary offers and promotions.

As you see, having a credit score – and a good one at that – is an integral part of the American way of life today. Establish good credit habits, pay your bills and dues on time, and regularly check your record for errors. Being proactive in your credit info will help you ensure you’re ready for when you need it the most.

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3 Things to Avoid While Improving Credit Score

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3-things-to-avoid-while-improving-credit-score

These days, having a less than perfect credit score ain’t all bad. If you fall short of getting a 700 on that credit report, you’ll still find lenders who’ll be willing to accept you as a borrower. Loan programs like those administered by the FHA are also more forgiving of those with blemished credit.

Legislation like the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 have also paved the way for banks and credit unions to offer financial products outside of the prescribed loan guidelines. If you are self-employed with limited documentation, you could still be granted any of the so-called ‘non-qualified’ mortgage products like stated income or no documentation mortgage loans.

Is a non-qualified loan the answer to your financing needs?

The information above should prove useful if you really need to buy a house now. However, if you can hold off on the purchase, it would be wise to work on improving that credit score first. Disputing errors on your credit report and seeing to it that bills are paid on time are just two things you can do toward this end.

To ensure that you don’t fall off the wagon while building better credit, here are three things you should avoid.

1.Moving debt around

Owing a considerable amount of debt has an adverse effect on your credit score. As such, it could be tempting to move debt around so this can be resolved quickly. However, moving debt around could lead you to owe more, which could then be more difficult to pay.

2. Opening too many credit accounts

Avoid opening too many accounts in order to have a better credit mix. This practice can pull down your credit score. What you can do instead is focus on having one or two credit cards that you can maintain.

3. Failing to update relevant personal information when necessary

Not informing your creditors that you’ve changed addresses can lead to bills not being received on time. This could lead to late payments for bills and other forms of debt. In the same manner, failing to notify of a name change could result in inaccuracies on your credit report.

Get more insights on improving your credit score from a reputable lender.