Improve Your Credit Score Before Getting A Home Loan

Dated: 03/22/2015

Views: 581

Improve Your Credit Score Before Getting A Home Loan

The better your credit score, the cheaper your mortgage. Credit checks are a standard part of the mortgage application process. Lenders use them to gauge the chances of your paying the loan back. The best interest rates go to the borrowers with the best credit history. If your credit score falls even a couple of points below your lender's cut-off point, it could add up to thousands of dollars over the life of the loan.

Learn what your credit report says about you. Once a year you can obtain a free credit report from each of the three major credit bureaus--Equifax, TransUnion and Experian--through the website. The report includes your credit accounts and whether they're in good standing, and any potentially negative items. To obtain your credit score--the numerical ratings the bureaus give you--you will have to pay extra. CNN recommends you check your credit three to six months before going house shopping, to give you time to work on any problems.

Contact the bureaus if you find any errors, CNN suggests. If you've paid off a loan that's listed as still carrying a balance, or you have a bankruptcy on your report that never happened, clearing up the error will improve your credit score.

Pay down high balance credit cards. The amount you owe will affect your credit score, the BankRate website states. If you're close to maxing out your cards, that will hurt your score even if the overall amounts aren't huge. For the same reason, you shouldn't close out any cards in the months before house shopping. That will make the ratio of your total card balance to your maximum balance much higher, which will lower your score.

Stay current on all your credit card payments and other bills. A missed payment close to your looking for a mortgage will count more than a missed payment a couple of years back.

At Elite Mortgage we work with credit restoration companies to help you increase your score.  Elite Mortgage has special niche loan products even if your credit score is low.  Contact me for any credit or home loan needs.

Frank Gotaas, Mortgage Loan Originator NMLS #981382, [email protected]

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