The better your credit score, the better chance you have at getting a great interest rate on your mortgage, and the amount that you want to get for your dream home. It’s a massive part of your mortgage application, and affects everything you do, and any time you make a major purchase, not just a home. So, if your credit isn’t great, how can you fix it? Here are 5 ways to turn your credit around and save yourself some money!
1. Get Your Credit Cards Under Control
If you have excessive credit card debt, that’s a huge red flag to lenders. They don’t want to lend to you if your debt-to-income ratio is really high. That’s why you should pay down these balances before you send in your applications for your mortgage.
And don’t just pay the minimums. Paying more shows lenders that you are aggressive in paying back your debts. It also saves you lots of money in interest payments.
2. Know Your Credit Score
TransUnion, Equifax and Experian can have mistakes on them. You can request them and go through them line by line, checking for inaccurate information. When you find an error, file a dispute as soon as possible.
After filing, the credit bureau will contact the source of the complaint, and the claim will be investigated within 30 days. You can also send a letter of dispute straight to the credit reporting companies with copies of supporting documentation. Always use certified mail to make sure the company receives your dispute.
3. Don’t Add More Credit
Many people want to go into their new home with all new, cool stuff. But don’t go swiping that card or filling out the forms for a loan or new card until you have your mortgage in hand. Your credit report needs to look as clean as possible when you apply, and new credit inquiries can send up red flags.
4. Get Pre-Approved Before You Shop
Get pre-approved for your mortgage before you start shopping for a house. This way, when you do find the home of your dreams, you won’t have to worry about getting approved for a loan later.
5. Put Some Cash Away
A good way to show that you are trustworthy for a mortgage is to have cash available. Try to concentrate on saving up to six months of living expenses on top of your down payment, and make sure that you will be comfortable in an emergency before you sign up for your mortgage. This helps in two ways – one, it covers you in case of a problem, and two, it shows lenders that you are good with money.
These are all ways that you can help improve your credit score in advance of applying for your mortgage. When you’re ready, please call us! The Home Loan Expert, Ryan Kelley gets the lowest interest rates on the best loans every day. Apply online at www.thehomeloanexpert.com or call us in our Indianapolis office at 317-550-1515 today. Nobody makes it easier to buy a new home or refinance the one you have than The Home Loan Expert, Ryan Kelley.