When applying for a mortgage, your credit score will tell others if you are high or low risk. Figuring out when to use a mortgage broker can help you determine if you need to improve your credit score. The better your credit score, the better your interest rates and terms will be from lenders. Here are some easy tips and tricks to help you improve your credit score so you can get the home of your dreams!
1. Pay Bills on Time & In Full
Your payment history is the most influential factor when it comes to your credit score. If you are able to handle your payments in a timely manner then you are considered a more trustworthy buyer who pays your debts. Avoiding late payments and foreclosures is a great way to maintain a good credit score.
2. Keep Old Accounts Open
If you have paid off your student loans you may be eager to close that account and wipe it from your memory. However, if you made those payments on time and in completion, this could help improve your credit score. Having an account open with a good track record of paying bills on time and fully are the kinds of responsibilities lenders look for. Closing a credit card account can lower your credit score because you are lowering your credit limit. Over time, any bad debts can be automatically removed. For example, if you file for bankruptcy that can only stay on your card for 10 years whereas late payments will stay on your record for seven years.
3. Only Apply for Credit You Need
Every time you apply for a credit card, your credit temporarily lowers until you get approved for the credit card. If you need to apply for new credit it would be beneficial to research your likelihood of approval to make sure you are a good candidate. If it is possible to get pre-approved or pre-qualified, that would result in a soft pull instead of a hard pull of credit. Soft pulls do not affect your credit score, and you do not want to risk a lower credit score due to a denied application. You should refrain from applying for multiple different kinds of credit in a short period of time or before taking out a large loan like a mortgage.
4. Ask for Higher Credit Limits
Higher credit limits will immediately increase your credit score if your balance does not increase when your credit increases. To get a higher credit limit an increase in your income has gone up or you have added more years of a positive increase. This can increase your credit score fast so long as you do not use up the rest of the space on the card.
5. Dispute Credit Report Errors
If you notice mistakes on your credit report, it is important to fix the mistake because that can greatly lower your credit score. Disputing the mistake can cause your score to increase quickly. It can take a handful of time to get someone to dispute your credit error, but the process can be worth it if you are trying to improve your credit score in order to take out a loan or mortgage.
6. Be Patient & Monitor Credit
Your credit score will not improve overnight. The best way to successfully improve your credit score is by creating long-term habits that will positively affect your credit score in the long run. Good habits to improve your credit score include paying your bills on time, only applying for credit when needed, maintaining a low utilization rate, and more.
Make sure to monitor your credit to make sure you are improving. When you view your credit score, a soft inquiry is pulled which is better than a hard inquiry. Monitoring your credit score every few months will help you make sure your habits are improving your score. However, you do not need to make all of your financial decisions on your credit score, take into account what is best for you and your family.
How We Can Help!
Dee Ayers helps you understand your credit score and how to improve it. Your credit score plays a major role in applying for a mortgage or refinancing. Dee can sit down with you to discuss if your credit is high enough to take out a mortgage or refinance. Contact Dee today to get started!