Credit myths to keep in mind

It’s only natural to want to improve your credit, as it impacts many aspects of your financial life. This is especially true when it comes to borrowing money, making a strong credit score something all home loan borrowers should strive for.

While there are lots of ways to improve your credit, there are also lingering legends regarding strategies that don’t always work.

For this reason, you should keep in mind which financial facts are true and which are credit myths to forget.

Using cash benefits your credit

With so many horror stories concerning credit cards, it makes sense that people would assume staying away from credit altogether could be to their advantage.

Unfortunately, you actually have to use credit in order to build your credit history. Only using cash and avoiding borrowing means you will not have a payment history to show off.

Lenders want to see proof that you are responsible with your finances, especially when it comes to paying off debt. This is impossible to do by only using cash.

Credit scores change overnight

Paying off bills and keeping your credit balances in order are both great strategies to use, but it’s important to understand the role time plays.

Getting rid of debt will definitely benefit your credit score, but it will take time to be reflected. This means that if you’re planning on improving your score, you need to focus on doing so well in advance of borrowing.

Certain negative information can stay on your report for years, so keep that in mind before paying off bills in a flurry hoping to immediately boost your score.

Bad credit means no chance of borrowing

While less than perfect credit can make it more difficult to obtain home finance, there are specific loan products suited to these borrowers.

Bad credit mortgages can provide you with the funds you need regardless of past financial stress, such as paid or unpaid defaults or judgments, and bankruptcy.

If you’re looking into your bad credit home loan options, contact the specialists at Redrock.