All about good credit

Maintaining a clean credit record is not as hard as you might imagine. On the other hand, damaging your credit record is not very hard either. You need to understand how credit works in order to have a shot at the best mortgage rate, whether you plan to buy a house now or ten years in the future.

If you have never been in debt, you need to establish a line of credit as soon as possible. This may sound counter-intuitive, since most people operate on the false assumption that all debt is bad. In fact, having a history of responsible debt repayment, helps to show your mortgage lender that you are a creditworthy customer. Demonstrating creditworthiness puts you well on your way to obtaining the best mortgage rate.

So, if you haven’t already, apply for a few credit cards. Use them responsibly. Make sure that your payments are prompt, and they never fall below the minimum amount due. While you are entitled to use the full line of credit, it is best to avoid maxing out the cards. Your credit score might be negatively affected, which in turn would disqualify you for the best mortgage rate.

While you should make every effort to be the perfect credit card customer, it may not be the end of the world if you fall a little short. Lenders are most concerned with the recent past, specifically with the last two years. Though you may not be able to get the best mortgage rate with a record of credit problems, it probably will still be possible for you to obtain a loan.