If you’re thinking of applying for a mortgage, it’s important to have a good credit score. Your credit score not only determines your eligibility for a mortgage, but it can also impact the interest rate you’ll be offered. With that in mind, here are 5 ways to improve your credit score before applying for a mortgage:
- Check your credit report for errors: Before you start improving your credit score, it’s important to check your credit report for errors. According to a recent study, 1 in 5 credit reports contain errors that can lower your credit score. If you find any errors, report them to the credit bureau immediately to have them corrected.
- Pay your bills on time: One of the most important factors in determining your credit score is your payment history. Make sure you pay your bills on time every month, as late payments can have a negative impact on your score.
- Reduce your credit card balances: Another important factor in determining your credit score is your credit utilization rate, which is the amount of credit you’re using compared to your credit limit. Ideally, you should aim to keep your credit utilization rate below 30%. If your credit card balances are high, work on paying them down to improve your score.
- Don’t apply for new credit: Every time you apply for credit, it can have a negative impact on your score. Avoid applying for new credit before you apply for a mortgage, as it can lower your score and make it harder to qualify for a loan.
- Work with a credit counselor: If you’re struggling to improve your credit score on your own, consider working with a credit counselor. A credit counselor can help you develop a plan to pay down your debts and improve your score, which can help you qualify for a better mortgage rate. Our professional, licensed Loan Officers can assist in getting you where you need to be with your credit.
If you find yourself ready to start your homeowner's journey, but your credit could use some work, contact us today and we can assess your situation and work with you to improve your credit. Once you are in a better credit position, the same Loan Officer that helped you prior, can now get you pre-approved and get you on your way to being a homeowner!
Improving your credit score takes time and effort, but it’s worth it if you want to qualify for a mortgage with a good interest rate. By following these 5 tips, you can improve your credit score and increase your chances of getting approved for a mortgage. Our team is ready and available every day to assist you in achieving your dream home!