1)  Pay your bills on time.

2)  Reduce the amount of outstanding debt you owe.

3)  Don’t keep applying for new credit cards (don’t cancel the ones you  have, just stop using them and pay them down). 

4)  Make sure to look at your credit report once a year to keep an eye on it, this helps you correct mistakes and keep an eye out for possible identity theft. A good way to watch your credit is to pull up just one of your free credit reports every three months that way you are rotating your free reports and can see how things are progressing.

5)  If you have a limited credit history and feel this could be working against you, you can get what is referred to as a secured loan or a credit building loan. This basically means that you give the bank $1,000 and they then loan you $1,000. Seems odd perhaps but this is a valid way of building up your credit history.

6)  Get a credit card – but only do this if you have no credit history at all. Sometimes it is easier to get a store credit card so this may be a good route. Charge a very inexpensive item and pay for it over time. Only buy something for like $50 because you’re trying to improve your credit score not pay huge amounts of interest. Be sure to make all your payments on time, because even one late payment can have a negative impact.

Your overall FICO score will determine what kind of rates you will get from your lender. Your FICI score applies to all loans – personal, car, boat, and home. The higher your score, the more favorable your interest rates will be.

Your FICO score is determined by these 5 factors:

1) Payment History (35%) – If you always pay your debts on time and have no bankruptcies this is a positive.

2) Total Amount of Debt (30%) – This is the measure of all the accounts that you have open. FICO also measures the amount of credit you have available vs. the amount you are using and factors that in here. For example, if you have $20,000 available on a credit card, but only have an outstanding balance of $200 this is obviously much better than being maxed out at the full $20,000.

3) Credit History (15%) – A longer credit history is generally better, but if the rest of your credit report is good, you can still get a good FICO score.

4) New Credit (10%) – Showing a sudden increase in seeking new credit may lower your score. When a bank runs your credit history this may very well impact your score by up to 5 points. But FICO takes into consideration multiple applications for a specific loan. For example, if you are shopping around for a more competitive house loan rate and you have your credit checked by multiple lenders. However, it is advised to get these multiple checks done in a condensed time frame, like a 30 day period, so that FICO can clearly see your intensions and so your score doesn’t become adversely affected.

5) Other Considerations (10%) – With a longer credit history, it is considered good to have diversity in your debt. It would be a plus to have a mix of credit card debt, car loans, property loans and personal loans.

Real Estate Agent Commission – This is a true buyers market, virtually everything is in the buyers favor at this time. The standard realtor commission used to be 6%, this was an industry standard that held true for many years but the market has changed and it’s entirely up to you to negotiate the best deal possible for yourself. A lot of people are uncomfortable with the whole negotiating process but it is not considered rude or inconsiderate but rather just part of the normal procedure. If you have hired a professional realtor, they will not be offended if you ask if they are willing to accept a lower commission. In this market, real estate agents are competing heavily and if you are a qualified buyer, I almost guarantee you’ll be able to find a realtor who will accept a lower commission.

House Price – This is an obvious one but it needs to be touched on. In this market, cash is king and you can scoop up some real estate deals if you bide your time and do your research. Before making an offer on a house find out how long the house has been on the market, what are comparables going for, what did the house sell for originally, and has the price been recently reduced. The longer the house has been on the market, the more desperate the seller is to sell. But, be cautious and also consider that the reason the house hasn’t sold is because the owner has set an unrealistic sale price. A realtor will be able to advise you on these points. I heard it said once that when you make an offer on a house, if your not a little bit embarrassed that your offer is too low then you offered too much. I think this is true. Go low; it’s not your problem if the home owner is insulted, you’re trying to get the best deal possible for you and your family.

Loan Origination Fees – Loan officers who work in banks and other lending institutions like credit unions are usually paid by commission. In some instances they may be paid only straight commission with no salary and the loan origination fees you pay are their salary. The loan origination fees are typically 1% of the sale price and the loan officers gets a percentage of that, about 40% – 70% with the bank keeping the rest. In some cases, they work on a tiered scale where if they close a certain amount of loans they would go up to a higher level and then get a larger percentage of the loan origination fee. In cases like this, if the loan officer is short on loans, it is in their best interest to work with you so that they can get up to the higher level for the month or quarter and then they would make money anyway.

Home Appraisal – When buying an older home, a home appraisal or inspection is often required and should definitely be requested by you the home buyer. This is usually a smaller fee but it may be negotiable.