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When applying for a mortgage, your credit score is the most important factor. It will be the foundation for the entire loan program. Not only does it determine your interest rate, but also what loan program you may qualify for, private mortgage insurance, and more.
Here are just a few things you can do to help increase your score:
- Check your credit report for accuracy. This is the first step in improving your credit score. You want to make sure that all of the information on your report is accurate. If there are any errors, you can dispute them with the credit bureaus.
- Pay your bills on time. This is one of the most important factors in your credit score. You want to make sure that you are paying all of your bills on time, every time.
- Keep your balances low. Another important factor in your credit score is your credit utilization ratio. This is the amount of credit you are using compared to the amount of credit you have available. You want to keep this number as low as possible, ideally below 30%.
- Get a mix of credit types. Having a mix of different types of credit is good for your score. This could include a revolving line of credit, such as a credit card, and an installment loan, such as a car loan.
- Use credit counseling services. If you are having trouble managing your debt, you may want to consider using credit counseling services. These services can help you develop a budget and get on a repayment plan. If you’re unsure of which company to go with, ask you loan officer for a recommendation.
If you can follow these 5 easy steps, then you should see a significant increase in your credit score. At Mortgage 1, we offer free credit consultations to help you understand your credit report and identify any areas you may need to work on. If your credit score is too low to qualify then your loan officer can help you setup a timeframe for when you may be ready. We also have a number of programs available for those with bad credit.