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Mortgage rates hit bottom few qualify
SAN FRANCISCO (9/19/11)--Headlines read: “Mortgage Rates Hit Record Lows.” With rates lower than they’ve been in more than 50 years, a 30-year, fixed-rate mortgage averages well below 5%, compared with 6.5% five years ago (MarketWatch Sept. 8). Yet, few Americans are able to take advantage of the low rates due to unemployment, stagnant wages, and low credit scores. Many financial institutions are requiring first-time home buyers to have credit scores above 700 to qualify for a mortgage loan. This boils down to about 40% of U.S. households having what it takes to get a prime rate ( Sept. 8). To improve your credit score, Credit Union National Association’s Center for Personal Finance says to take these steps to improve your score:
* Pay bills on time, all the time. This means all bills, including utility bills. Stay on top of due dates by setting up automatic payments through your credit union’s online bill payment website. * Don’t max out credit lines. It’s best to use part of available credit on a few accounts rather than all available credit on one account. Keep balances low and try not to charge more than you can pay in full each month. * Don’t open or close accounts as a strategy to raise your score. Opening new accounts can send a red flag to lenders that you’re taking on new debt and might indicate that you won’t be able to pay other debts. * Check credit reports from the three major credit bureaus--Equifax, Experian, and TransUnion--for free, once each year through, and contact the creditor and the credit bureau to correct any errors. * Pay fines. Whether it’s a parking ticket or a library fine, pay up. If debts are reported to a credit reporting agency, they can knock your credit score. * Become an authorized user on someone else’s card. If you’re a young adult and haven’t built up much of a credit history, ask your parents if they’ll include you as an authorized user on their card. You’ll have full charging privileges, but aren’t responsible for payments. The activity will be reported on the primary cardholder’s report as well as yours.
For more information about getting your financial life back in order, read the Financial Fitness Challenge “Earn a Second Chance” in the Home & Family Finance Resource Center.
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