If you’re applying for a mortgage or refinancing, you know that your credit score is one of the first things that we look at to determine whether you get your mortgage, and what rate you get it at. If you have bad credit, you’re going to get rejected or have to pay a higher interest rate on your mortgage. However, low credit isn’t a death sentence. It’s just a setback. Since The Home Loan Expert Team wants to get a mortgage for everyone, we wanted to share four simple steps to fix your credit score before applying.
Keep Your Credit Card Balances Low
Watch out for creeping credit card balances. Sometimes, sure, you have to have things. If you want to buy a home, you have to budget and keep your balance low. Putting a trip on your card, buying a new flat screen, or anything that adds to your balance. Even if you’re paying the balance monthly, though, there is a hidden danger. It’s called revolving credit, and it can hurt your score as well. You essentially want to use less than 30% of your credit monthly. You also want to avoid “nuisance balances”, where you have $75 on one card, and $100 on another. Pay those off and consolidate! Keep your credit to one or two cards and your credit will bounce back.
Good Debt is Good for You
The longer your history of good credit is, the better. As you make payments on time and pay off debt, don’t rush to get your completed items off of your credit. You want to keep good records on your credit, not dump them. While bad credit will leave your report after 7 years of stinking up the place, your good items will remain, making you look good in perpetuity. Don’t throw away a report card full of A’s!
Work Quickly on Your Applications
When you apply, FICO ignores credit inquiries made within 30 days of a mortgage application, so you can make multiple applications for your mortgage to shop for a better rate. They understand that you’re shopping for a better rate, as opposed to applying for, say, 5 or 6 credit cards at once. So the lesson is, don’t mess around. Get your applications in so you can make a good decision without hurting your credit.
Pay Your Bills
I mean, I shouldn’t have to say it, right? Pay your bills on time and your credit score will rebound. It’s that simple. If you don’t make payments, or you consistently pay late, it WILL cost you your mortgage and low-interest rate.
If you’re ready to buy or refinance, call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?