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A small drop in your credit score could cost you hundreds of dollars a month on a home in Southern California. In this market, your credit score does not just affect your interest rate. It can literally change how much house you can afford.
If you’re serious about buying, you need to understand that your score is your strongest leverage. Here are three common mistakes I see buyers make and how you can avoid them:
1. Opening new accounts too soon. One of the biggest errors is opening a new account or financing a large purchase right before applying for a mortgage. Whether it’s a new car, furniture for a house you haven’t bought yet, or even a simple store credit card, these moves can spike your debt and drop your score fast.
In Southern California, that lower score can reduce your buying power by $50,000 to $100,000. It’s not worth it.
2. Carrying high credit card balances. Many people think that paying on time is enough. However, even if you never miss a payment, using more than 30% of your available credit limit will hurt your score. Paying those balances down can sometimes raise your score in just a month. So, keep those balances low to keep your score high.
3. Missing small payments. One late payment can tank your score for months, if not years. Do not let a small slip-up ruin your chances of homeownership. Set up autopay for everything and protect your score like it’s cash, because in the real estate world, it basically is.
The difference between a 620 credit score and a 720 credit score could mean paying hundreds more per month for the exact same home. That is money that should stay in your pocket, not go to interest.
Before you start house hunting, let’s talk. You can reach me at (951) 265-3524 or josh@morethanjustarealestateagent.com. I will help you make a solid plan so that you qualify for the best rate possible.
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