Credit repair

Myths about credit scores

The Property Tax is a wealth tax on land and real estate. Since the State of Florida, its districts and communes do not collect income taxes, they are required to obtain income in another way. Taxes are mainly collected by cities.

Did you know there’s a common misconception that carrying a balance on your credit card from month to month can benefit your credit score?

That’s not true, ideally you should pay your credit card in full each month. Carrying a balance will not help your credit scores. All it will do is cost you money in the form of interest.

-The lower your utilization ratio, the better it is for your credit scores. The utilization ratio is calculated by dividing your monthly statement balance, the amount shown on your bill, by the loan limit.

However, it can be strategic to reduce your utilization rate if you pay your bill before your statement is generated.

For example, if you have a total credit limit of $5,000, spend $2,000 on your credit card and pay $1,500 of that expense, before your credit card statement is generated. Your statement will only reflect $500, therefore your utilization rate will be considered 10% and not 40%.

It is best to pay off your credit card balance in full each month.

If you are trying to establish a strong payment history, we recommend the following:

  • You can make small purchases on the credit card each month, paying the balance in full and making sure all payments are made on time.
  • If you can’t pay the balance in full, keep it as low as possible.
  • You should never carry a balance of more than 30% of your credit limit on one card or in total. The lower your balances, the better for your credit scores.
  • Pay the credit card bill before the statement is generated.

6 strategies to improve your credit before you buy a home

Something that can negatively affect the decision to purchase a property is a low credit score. The credit score is a three-digit number that is of great importance in the American economy and speaks of how we manage our debts, our financial commitments. For example, it is very common for people who pay cash, even with excellent incomes, to have low credit scores, because what is important is not only how much income a person generates, but how that person manages their credits.

Most people don’t think much of their credit score until they need to make a big purchase or take out a loan. For most of us, a property is one of the biggest investments we can make; and, a loan, in many cases, is the only way to achieve it.

When it comes to financing, a low credit score could lead to: 

  • Higher interest rates
  • More time to be approved credit
  • More proof of income
  • A higher initial (down payment)
  • The rejection of the loan by the eventual lender.

6 key points to improve credit: 

  1. Balance:  Knowing your score is the first step and the most important recommendation is that you pay the balances you have on all your credit cards. This helps increase your score. It’s fine to use one of your credit cards, but always make sure you keep your monthly balances as low as possible. Experts recommend using no more than 30% of available credit to maintain very good credit. According to the Federal government, 3 free credit reports are allowed per year. You can get this information online, but beware, many sites that are not “associated” with the Federal Government may try to charge you for this report.
  2. Pay on time:  If you really want to increase your credit score, this is another effective way to do it. While it may be easier said than done, it’s important to make sure all payments to every credit card and loan you have are made on time. After 15 days of late payment, it begins to reflect negatively on the credit.
  3. Do not close accounts:  As we said before, pay off all your credit cards… But do not close any of them until you have applied for your mortgage. The cancellation or closing of a credit card can have a negative effect on your credit. Paying off cards and keeping your line of credit open can increase your chances of getting your mortgage.
  4. Open new accounts:  Opening new credit card accounts can quickly improve your credit score. If you don’t make any purchases on your cards, including the new one, your average credit usage will go down and your credit score will go up. ​
  5. Big purchases:  Do not make big purchases before applying for a mortgage loan; this includes, but is not limited to, going on long and/or expensive vacations, buying a car and any other valuables. Those fees can make your credit look weak.
  6. Planning:  Improving your credit score is not something you can do overnight. Credit repair can take months. So be patient and plan ahead.