Looking to Purchase a Home? 5 Tips to Improve Your Credit Score to Get a Superior Mortgage
Posted by: admin in Money General Talk
When most people go to buy a home, they take whatever deal the mortgage lender will give them. Many get “house fever” and want to pursue the American dream so badly that they’ll sign whatever’s put in front of them so they can own their very own home. Many consumers have gotten themselves in real trouble in the last few years for taking exotic loans to pay for their home. They were sucked in with a low teaser rate and then later found themselves unable to make their payment when their interest rate adjusted upward. When buying a home, don’t repeat these mistakes! Instead getting stuck with a sub-par loan, take active steps to improve your credit score so that you can qualify for the best mortgage available. Here are five tips to help you improve your credit score to get into a superior mortgage.
Check and Correct Errors on Your Credit Report – Most studies show that 1 out of each 3 Americans have mistakes on their credit reports that are significant enough to cause us to not qualify for the ideal interest rates available to us. Head on over to AnnualCreditReport.com and check your three credit reports for free to make sure everything on them is accurate and correct! If there are any errors, dispute them and get them corrected.
Reduce Your Consumer Debt – If you’ve credit cards or other consumer debt, pay down on them! This will lower your debt utilization ratio and improve your overall credit score.
Don’t Open New Accounts – Six months before you apply for a mortgage, don’t sign up for any new credit cards or other accounts. Credit inquiries and opening new accounts will lower your credit score by anywhere from 10 to 50 points.
Pay Your Bills On Time – It seems simple, yet many people don’t keep good track of their finances and make a payment late each once and a while. Even a few late payments will significantly lower your credit score and prevent you from qualifying for an optimal mortgage. Make sure to pay each payment early or on time each and every month!
Don’t Close Paid Off Accounts – A common misconception about credit scores is that if you pay off an account and close it, your credit score will go up. People think that if they’ve massive credit lines with no balance that the bank will think they could potentially just go out and borrow a bunch of money and be in a much worse situation. It would make sense that having a bunch of credit available to you would damage your score, but quite the opposite is true. If you’ve a big amount of credit available to you, but don’t use it, you’ll have a much lower debt utilization ratio and have a higher score.
Don’t think that you’re stuck with whatever mortgage the bank will offer you now. Take active steps to improve your credit score so that you can get a superior loan from the bank.
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