Is your credit score holding you back from getting the best rate on your next mortgage? The good news is that there are actions that you can take to increase your credit score and improve the interest rate offered on your next home loan.
Here are a few easy and effective tips to help you get your credit score to where you want it to be.
Increase The Amount Of Credit Available To You
The easiest way to increase your credit score is to increase your
credit limit, as this reduces your utilization ratio. To do this, you
can either apply for another credit card or ask a current credit card
provider to increase your credit limit. Those who have a stable income
and have made their monthly payments on time should have no problem
getting an increase of their credit limit.
Pay Down The Balances On Your Credit Card
Paying down your credit card balances can help you increase your
credit score, as a large portion of your score is determined by the
percent of available credit that you are using. Ideally, you want each
card balance to be under 30 percent of the total limit while also
keeping your total credit usage to less than 30 percent of available
credit. A utilization ratio under 30 percent tells lenders that you can
manage credit responsibly.
Settle Past Due Debts
Roughly one-third of your credit score is determined by your ability
to make payments in a timely manner. If you have any payments that are
30 or more days past due, you may wish to settle those debts or make
arrangements to pay them.
Creditors who allow you to roll past due payments back into your loan
may update your credit report to say that you are current on your
payments. This could have a huge impact on your credit score and help
you qualify for a better rate on a home loan.
Increasing your credit score is one of the best ways to get the best
rate on a mortgage. This may enable you to gain additional leverage when
negotiating for a better rate that may lower your monthly payment to a
more affordable level.
For more information about how to get a great mortgage rate for your
next home purchase, or for advice on how to improve your credit score,
contact your local mortgage professional today.