If you’re buying a home in Middle Tennessee, there’s a good chance you’ll need a mortgage loan to do it. Most people do. But what if your credit isn’t perfect? What can you do to boost your score so you qualify for better interest rates and terms? This guide explains.
3 Tips to Help You Boost Your Credit Score for a Mortgage
Check out these three tips to help you boost your credit score to qualify for a mortgage:
- Look for errors on your report (and have them fixed)
- Deal with delinquency and make payments early
- Build a fresh credit history
Scroll down for a closer look at each.
Tip #1 to Boost Your Credit Score for a Mortgage: Look for Errors on Your Report (and Have Them Fixed)
Check your credit report and make sure it doesn’t contain any errors. Thanks to the Federal Trade Commission, you’re entitled to one free copy of your credit report each year from each of the major credit bureaus. You can get yours at http://www.annualcreditreport.com/ or by calling 877-322-8228.
Alternatively, you can download free app, such as CreditKarma, to see what items your report contains. If you find any errors, dispute them with the reporting agency immediately. Agencies are legally required to investigate errors, and they can’t charge you a fee for doing so. Generally, you need to explain in writing what you believe is wrong; then, the agency has to investigate the situation and notify you of its findings.
Even simple errors on your credit report can cost you points, So it’s in your best interest to go over everything you find and ensure that it’s correct.
Tip #2 to Boost Your Credit Score for a Mortgage: Deal With Delinquency and Make Payments Early
If you have any delinquent payments, make them as soon as you possibly can. Additionally, you may find it helpful to make your payments a week or two early. Some financial experts recommend making two payments a month, which helps ensure that you’re paying more than the minimum amount required. That helps your balances decrease faster, which can boost your score.
There’s a small trick called the 15/3 credit card payment hack you may want to use. This hack says that you should make one payment 15 days before your statement date, then make a second payment three days before that date. Your statement date is a different date than your payment date is; your Payment date is the last day you can pay before beginning to accrue additional interest charges.
Tip #3 to Boost Your Credit Score for a Mortgage: Build a Fresh Credit History
If you don’t have much credit history, or if you need to improve the credit history that you do have, it may be a good idea to open a small, secured line of credit. This can help boost your credit score because it shows prospective lenders that you can manage monthly payments. When lenders see that you can manage monthly payments, they can be more confident letting you borrow money to purchase a home.
Why is Your Credit Score So Important to Lenders?
Your credit score is incredibly important to lenders because it’s like a grade in school. It shows your track record of making timely payments when you owe money. It also shows how much other lenders have been willing to let you borrow, as well as how long you’ve had an active credit history.
Though your credit score isn’t the only factor lenders look at when determining whether to let you borrow the cash to buy a home, it’s a very important one. The higher your credit score is, the more likely you are to qualify for the best interest rates and terms.
Are You Buying or Selling a Home in Middle Tennessee?
If you’re buying or selling a home in Middle Tennessee, Benchmark Realty has you covered.
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