If you’ve been looking into various mortgages, chances are you’ve already considered your credit score. This score, which uses your credit history to determine the risk a lender takes when lending to you, is a huge factor in both the types of loans you can qualify for and the mortgage rates you’re eligible for.
Luckily, even if your score is not where you’d like it to be, there are plenty of options out there for you to improve it. Here are some basic tips.
Checking your credit report is free, and can be done at AnnualCreditReport.com from each of the three main agencies – those who tell you this will damage your score are living in the past. However, be aware that the score you find using this resource won’t always be completely accurate; it’s possible for incorrect information to make its way into the report.
In these cases, you can act. Credit card companies leave open avenues of contact for this sort of thing, as they know mistakes can happen. You can even dispute claims with credit bureaus if you find legitimate, documented reasons why your score should be higher.
A big factor in credit score is the percentage of your total available credit you’re using at any given time. It’s best to keep this number below 30 percent on each card.
If you’ve had past credit problems, there are ways you can reset the ledger. Apply for some new accounts and be diligent about paying them off to show you can manage debt. Some easier accounts to open even if you have bad credit include secured credit cards.
Another big factor in your FICO score is paying on time – this is about 35 percent of your total score, in fact. Ensure you have a strong history of on-time payments, using auto payments or email reminders if needed.
Be careful about managing your accounts properly. Don’t max out your accounts, keep your balances low, keep paid-down cards low and don’t open too many accounts in a short time (this will raise some red flags).
For more tips on raising your credit ahead of getting a mortgage, or to learn about any of our mortgage options, speak to Deb Klein and her team today.
*The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc.