Apr. 17, 2007 - A Good Credit Rating for Purchasing Real Estate

I recently read a great article by Eric Bramlett, an Austin, TX Realtor in which he takes a look at the spending habits of people with great credit scores. It seems they all had 7 habits in common.

1. Never Pay Cash - The only way to make your purchases (and payments) known to the big three bureaus is to pay with a credit card. I'm dating myself here, but I remember standing in line at a grocery store behind someone purchasing an item under $10 with a credit card and thinking that they probably couldn't afford to pay cash. This is no longer the case! These purchases are known to credit card companies as "micro-purchases" and can boost your score. Use it for movie tickets, soft drinks, and gum.

2. Never Use a Debit Card - Debit cards will not build your credit score. In addition, if you lose your debit card, you aren't protected against fraudulent purchases as you are with a credit card.

3. Pay Off Your Balance(s) - Try not to carry ANY balance. Pay them off every month.

4. Put Yourself on a Bill Payment Schedule - Make sure you are consistent. Schedule one day each month to pay your bills.

5. Consistently Request Higher Credit Card Limits - If you consistently borrow money and pay it off, credit card companies will easily raise your credit limit. It is best to have the balances of your cards below 35% of the cards limit. Higher limits make you eligible for special promotions on occasion.

6. Never Close a Credit Card Account - The age of your credit card matters to credit bureaus. If you over spend and have difficulty paying off a card, but eventually do get it paid, you lose the history of paying off on that card if you close the account.

7. Never Rent - The biggest impact on your credit score is the purchase of a home. A first-time home buyer after they close on their new home will see their credit score jump around 50 or more points within a few months.