Do you want a lower interest rate? Begin with your credit score
It takes time to improve your credit score; it’s not a sprint. In the long run, developing these habits can improve your credit score. There is never a better time to establish sound credit habits than now, whether you’re applying for a mortgage, getting ready to refinance, or planning for the future:
1. Pay your bills promptly
The most crucial thing you can do to improve your score is to pay your bills on time. A person’s payment history has the greatest impact on their credit score. For lenders, a person’s ability to make credit card payments on time shows that they are able to take out and repay a loan. But your credit is affected in more ways than just your credit card debt. All of your bills must be paid on time. That includes all of your utility bills, your student loan debt, and any potential medical expenses.
2.Use no more than 30% of your credit score
Your credit score can be lowered by having revolving credit accounts with high balances. Think about reducing your higher balances and paying off your higher balances. Make one large payment every month or, even better, as many smaller payments as your credit account permits. Your credit score is raised by making two credit card payments each month. Maintaining responsible balances demonstrates that you are able to pay off your debts and are aware of how to use the credit that is available to you.
3.Do not move your debt
Paying off other credit accounts with no interest may save you money, but it isn’t always the best move for your credit score. Opening new lines of credit to pay off other debt can lower your credit score by adding credit inquiries to your history and opening new accounts without lowering your balances. To avoid making unwelcome interest payments, try to pay off those accounts as quickly as possible while keeping the balances low.
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4. Regularly safeguard your identity to improve credit acore
Corporate data breaches have made it more important than ever to check your credit score and accounts. If your identity has been compromised, you must act quickly to avoid negative effects on your credit and b) having to pay for the damages. There are resources available, such as Credit Karma and freecreditscore.com, to monitor your credit and alert you if anything is wrong. Check to see what kind of fraud protection your credit card and bank provide.
5.Consider long-term relationships with your credit score cards
When it comes to your credit, the age of your credit accounts is very important. Accounts older than 5 years can lower your average age, as well as your score. When closing old accounts or opening new ones, use caution. Use a credit score simulator, such as NerdWallet, to see how changes to your credit situation, such as adding or closing accounts, affect your credit score.
6.Don’t open too many accounts at the same time
The number of credit inquiries, such as applications for new financial products or requests for credit limit increases, as well as the number of new account openings, are considered by FICO and VantageScore. Making these types of inquiries frequently lowers your credit score, so only apply for what you truly need to avoid harming your score. If you want a new card but aren’t sure if you qualify, you can fill out an online pre-qualification form. You can fill out as many pre-qualification forms as you want because they have no effect on your credit score.
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7. Dispute credit report inaccuracies
A mistake on one of your credit reports may be lowering your score. Resolving credit report errors can help you improve your credit quickly. You are entitled to free credit reports from all three major credit bureaus. Request them from AnnualCreditReport.com and then review them for errors, such as payments marked late when you paid on time, someone else’s credit activity mixed in with yours, or negative information that is too old to be listed.
Once you’ve identified them, you should get that discrepancy resolved
If your credit isn’t where you want it to be, it’s never too late to start working on it. Contact a Dream Home Mortgage loan officer today to determine what’s preventing your credit score from improving and to put you in a position of financial stability for the future.
Dream Home Mortgage, An Equal Housing Lender, a Division of Brazos National Bank, is committed to providing affordable mortgages with superior customer service. Contact a member of our team immediately at (972) 245-5626 to initiate the first-time homebuyer financing process with our trained staff. Please send your inquiry to Info@dreamhomemortgage.com