How to Improve Your Credit Score

                                  How to Improve your Credit Score to Get a Mortgage

If you’re in the market for a mortgage, it’s important to look at your credit score first. Many potential buyers don’t realize they can check their credit or improve it, but you can do both. Once you know your credit history, you can take the necessary steps to improve it.

                                             Why your Credit Score is Important

You may wonder why your credit score is so important. Here’s why.

It’s the first thing lenders look at when you apply for a mortgage. If your credit score isn’t high enough for the chosen loan program, they’ll decline your application without looking at it further. Think of it as your first impression to a mortgage lender. You want it to be as good as possible or you risk not getting approved. Here’s how.
 

                                             How to Increase your Credit Score

Your credit score changes monthly. With these simple changes, you can increase your credit
score and your chances of approval.

                                              Bring your Accounts Current

If you have any late payments reported on your credit report, get them current fast. Late
payments can hurt your credit score the most since your payment history makes up the largest
portion of your credit score.

                                                Pay your Debts Down

The next largest part of your credit score is your credit utilization. This refers to the amount of
your credit lines you have outstanding. Any amount over 30% of your credit line or 300 for
every 1,000 in credit line, hurts your credit score. Work on paying your debts down and watch
your score increase.
                                           Don’t Close Old Credit Card Accounts

It sounds odd, but keep your old credit card accounts open. They help your credit age. Your
credit score improves when you have older credit accounts. New accounts don’t have a history
and can make you a higher risk.
                                            Don’t Apply for New Credit

If you’re in the market for a mortgage, avoid applying for any new credit. New accounts bring
your credit score down and increase your credit utilization. Wait until after you close on your mortgage to open up a new credit card to furnish your home or to buy that new car. New credit will only decrease your score and your chances of mortgage approval.
                                                  Final Thoughts

You don’t need a perfect credit score to get a mortgage, but the higher your score is, the more
likely you are to get approved. Working on your credit score before you apply increases your
chances of approval. It also helps you get better terms and interest rates.
It may take a few months to see a change in your credit score, though. Don’t expect changes
overnight. If you want to apply for a mortgage, I suggest pulling your credit 6 to 12 months
before you apply for a mortgage to give your score enough time to improve.