Reducing credit card debt in Texas can avoid future bankruptcy

While the last ten years have proven to be an economic nightmare for homeowners and credit card users, the state of Texas, like most of the nation, is starting to spring forward in a slowly growing housing market. As the economy shows signs of recovery, many Americans are looking to invest in a home. There are many factors on the laundry list to consider, especially if children are in the picture. A good location, successful school district, the number of bedrooms one should have — these are all important. But one often-forgotten point involves debts incurred on credit cards.

According to a 2013 survey by the Consumer Federation of America, banks and lending institutions scrutinize credit scores when an applicant applies for a mortgage. It is not too soon to anticipate potential credit-score issues before you begin your housing-hunting adventure. There are ways to improve your credit.

The credit card reporting agencies are not infallible. They make mistakes. Request a copy of your credit score from all the agencies and go over it with a fine-tooth comb. Your lender may pull all three versions and study them.

Another common sense strategy is to reduce your credit card spending. Lenders will frown upon high debt-to-income ratios. Don’t spend more than you make. Especially during the loan application process, be prudent about posting charges to your cards. You can buy that boat after your house loan finalizes.

Another good tip is to stay well below your spending limit. Just because your Discover card has given you a $3,000 limit, you don’t have to use it. A guideline is to keep your amount under 30 percent of the allowed maximum.

Property is still affordable in Texas. A prospective homeowner should take the time to speak to someone who can explain what his or her scores really mean. Why they are low and what one can do to raise them may involve time and dedication. Legal and financial professionals can assist you as you contemplate entering a decision that will keep you on a steady path. It is a move that can affect the rest of your life.

For some, however, bankruptcy may be the best option, as it provides a fresh financial start. Many people have too much debt to overcome on their own, and bankruptcy may provide a needed solution.

Source:El Paso Online, “The do’s and don’ts, how to prime your credit score before you house hunt” No author given, May. 01, 2014