If you are trying to buy a home or refinance your existing mortgage, there are a few things you can do to improve your credit score in order to get the best interest rate. The following tips will help you raise your credit score and give you the borrowing power you need to get the best deal possible. Before you need to borrow money, take a good look at your credit and take the steps to improve your scores now. Before long, scores will be higher than ever.
Examine Your Credit Reports
Take a close look at your credit reports. Make sure all the information is correct, and your accounts are all current. Sometimes when accounts are paid off, companies will forget to report them as closed. Accounts from individuals with similar names may also show up on your reports by mistake. Keep a copy of your credit report every year for future reference.
As you are looking through your credit report, take note of any inaccuracies. Go over each one carefully and take the steps to dispute it binbex. Point out what is wrong and what needs to be done to correct it. You can also ask to have older accounts removed from your report.
Pay Your Bills On Time
Paying your bills on time every month shows financial responsibility. If you can pay all your bills a week ahead of when they are due. This way, if you forget, they won’t be late. Continually paying your bills on time is the best way to show you are aware of your responsibilities and are taking the necessary steps to honor them.
Pay More Than the Minimum
Pay more than the minimum amount every month. This will pay down the principal at a much faster rate and reduce the amount of interest you will pay over the life of the loan. Simply rounding up your payment amount to the next $5 or $10 increment can make a substantial dent in the amount you owe. If you can, make a double payment every few months.
Don’t Over-Extend Yourself
Don’t over-extend yourself. One of the first things a lender looks at is your debt-to-income ratio. If the amount you owe gets too close to the amount of your income, it can damage your ability to refinance your mortgage. Before you apply for any new lines of credit, pay off a few of your old ones.
Pay Off Your Old Loans
If you have any old loans with low balances, work on getting them paid off. Paying off old credit cards will open up the credit line and improve your debt-to-income ratio. It will also show you have credit amounts that you are not using.
Once you have corrected your credit problems, it’s probably time to start shopping for loans. There are lending agencies (like Rob’s Loans of Denver since 1993) that recognize and reward your hard work beyond just a lower rate on your mortgage.