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.Share
About the Author:Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.