HOW TO IMPROVE YOUR CREDIT SCORE
Achieving and maintaining a good credit score seems to be a problem for many of us. One mistake and your score can be wrecked for a good many years. There is hope though. Below you will a few simple tips on how to improve your score, to achieve the best mortgage rate possible when buying your first home.
Get rid of the bills. This might be easier said then done. Before you invest in anything new, pay off the old balances. Do you have an old college loan? Is it something that is still nagging at you? Pay it off. Take some of that spending money and pay it all off. It might hurt to not have those new shoes right away, but you’ll be thanking yourself later.
Do you have old credit card balances? Get that taken care of as soon as possible. Get yourself out of the revolving debt pattern. Say enough is enough and pay it all off now. I am doing the same thing right now. As of this time next year, my credit card debt will be paid off in full. Learn from those mistakes.
GOOD DEBT IS OKAY
There is a difference between good debt and bad debt. The above situation is bad debt. This is about good debt. The minute we pay off your house or car, it’s our instinct to get rid of it. Don’t do this. Leave this kind of debt on your report. This will work in your favor later. Every time you pay something off, it will paint you in a good light. Leave this debt alone.
When you are apply for a loan, it’s best to use a short time span. There is a short window of opportunity when the scores will work in your favor. Depending on when you do the application, it could make a dent in your score. It also won’t help if you have multiple accounts open at one time. The more you apply for credit, the more your score will be impacted. Avoid this if at all possible. Look at your calendar. Know the best time to apply. Know the best times to avoid this trap.
PAYING ON TIME
Believe it or not, paying your bills on times does impact your score. If you are late on just one payment, you will feel the pain. Don’t procrastinate. If a bill is due on the 15th of each month, pay it then. It’s even better if you can do prior to this date.
CREDIT SCORE FOR BEST MORTGAGE RATE
Many of our readers often ask what credit score they need to work towards to purchase their first house. While there are a multitude of factors when calculating your credit score, this target varies according to your debt to equity ratio, how much home you’re buying in comparison to your desired mortgage amount and income levels. Generally speaking, anything above a 700 will bode well, with a 720 threshold being even better. However if you can follow the above steps and achieve a 750 credit score (or higher), you should have the best chance at obtaining a preferred mortgage rate.
For more tips on how to bring positive changes to your credit score, visit Experian today.