It seems silly that one simple credit card can be the factor which qualifies you to purchase your home. Truth can be stranger than fiction. Sometimes, establishing or demonstrating an ability to successfully maintain long-term debt is the only standing between you and the home of your dreams.
Before you rush down to the nearest department store to apply for a credit card and receive a free set of steak knives, keep this in mind: not all credit cards are created equal. Lenders tend to look upon department store credit cards, gas station credit cards and the like as signs that you depend on them because you can’t actually afford the things you buy with them. Clothing, tires, various household goods…not the ideal and can actually count against you instead of help you. Instead, go for the Visa or MasterCard.
If your credit is insufficient, secured credit cards are relatively easy to get. You can probably get one from your bank. You can also perform a quick internet search and find one. The way these work are, you deposit a set amount, usually five hundred dollars, into a savings account which you cannot touch and a bank issues you a credit card for that same amount. In the event you miss a payment, the bank can take that payment out of the savings account. If this happens, your already shaky credit will be damaged even more. After you make a few on-time payments, your credit score will begin to see the impact. The longer you have had your credit card and paid on time, the better it will look on your mortgage application.
Your trusted real estate agent or broker can direct you to a quality lender who will tell you if you need a credit card in order to qualify for a mortgage. This is just one more reason why, if you’re a buyer you need your own Realtor®.