Let me ask you a question… Have you ever been tempted to buy your furniture, or maybe you’ve been at Best Buy and you wanted to buy that TV with zero interest on their credit card?
I understand, I’ve done it myself. But do you know that can hurt your chances of qualifying for a mortgage? Here’s why: if your credit limit is $5000 that they give you and you buy a $4050 TV, you are almost maxed out.
Even if its a zero percent interest rate, that’s gonna bring your test score down because if you actually want the best credit rating, you want to be at no more than 10%. The balance needs to be no more than 10% of whatever the limit is. So, if the limit is a $1000, you don’t want your balance to be more than a $100 by the time that card reports to your credit bureau, which you can call and ask when they report to the credit bureaus.
So, if you are tempted on getting one of these zero interest accounts with, you know, your furniture, or one of these credit cards accounts and you max it out because it makes sense to not to pay interests, trust me, I understand, just make sure you time it correctly so that by the time you are planning to apply for a mortgage, you’ve paid down that balance to at least ten percent or more to get the highest possible credit rating . That is how credit bureaus calculate and give you the best possible scores when they’re comparing your balances vs. the limit.
Also a good tip: make sure you call your account every six months, all your credit cards, and all your lines of credit and ask them to raise the limit as long as you can fight the temptation to max yourself out, because the higher the limit, the lower percentage of the balance anytime you do decide to use it which, raises your credit score. Hopes that helps, talk soon!