Holiday Credit Tips for Houston Home Buyers!
The holiday season is here, and Houston’s world-class shopping centers will be tempting us with fantastic sales and amazing varieties of gifts and goodies. But if you plan to buy a new home in the near future, overspending on the holidays can derail your plans!
If you already have a mortgage pre-approval in hand, or a home under contract, it’s critical that you do not do anything to negatively affect your credit score. Even if you aren’t planning to buy a Houston home for a year or two, your spending habits today can affect your home buying power in the future. For example:
Do not open new charge accounts. Department stores push their credit cards this time of year, and may offer an immediate discount on your purchase when you apply. Don’t be tempted! Opening a new card can drop your score a bit, and opening two or more new accounts will sink it further. This is because new lines of credit are considered riskier than established accounts. Each credit inquiry will temporarily drop your score as well.
Do not finance major purchases on credit cards, even if it’s a “zero percent interest” deal. That new big-screen TV, smartphone or high-end appliance might be a bargain, but increasing your debt will affect your debt-to-income ratio. The more outstanding debt you have, the less homebuying power you have.
Some credit cards offer higher cash-back bonuses during the holidays, to tempt you into charging more than you might otherwise. But unless you can pay off everything right away, you’ll be paying much more in interest charges than the cash-back deal provides. Remember, your debt-to-income ratio is affected whenever you take on more debt.
Your credit score is also affected by your credit utilization. Simply put, if you run your credit card balances up close to the limit, your credit score can drop significantly. In fact, consumers with the very best credit scores use their credit cards frequently, but pay off their balances in full each month.
Holiday gifts, parties, special dinners and travel can add up to a tidy sum! Budget these items ahead of time, so you are less tempted by impulse purchases and special offers. For more information about how your credit score works, visit MyFico.com.
We hope these holiday credit tips help you! When you are ready to find your new Houston home, let our expertise be your advantage! Contact us today for your personal real estate consultation!
Wishing you all the joys of the season,
KW Energy Corridor Team
11757 Katy Fairway | Suite 930
Houston, TX 77079