How to get a better mortgage rate
January 11 2018
If you're in the market for a new home, it's important to know your credit score. A good credit score can lead to a better interest rate on your mortgage, while a lower one might present extra challenges. Need to improve your score? Here are a few things you can do.
Check your credit. Start by requesting your credit reports from the three credit reporting agencies; you're allowed one free copy every year. Requesting one report from each agency every four months can show you how your credit changes over the year. If you're short on time, request all three at once.
Dispute any errors. Next, look for errors, signs of fraud or outdated information. Are the accounts familiar? Are all balances accurate? Is a closed account listed as open? If you spot an error, you'll need to submit your dispute in writing to both the reporting agency and the company that provided the information.
Stop credit activity. Until you apply for a mortgage, it may be a good idea to cease most credit-related activity. That means you'll want to skip any large purchases, avoid applying for any new accounts and try not to switch jobs or make any other major life changes.
Pay down balances. One of the most important factors in determining your credit score is the amount you owe compared to the amount of credit you have. Ideally, you don't want to use more than 30 percent of your available credit. If you can, work to pay down balances if you're using more than this.
Good credit can take time to build, but regularly reviewing your information and working to rectify past errors will put you in the best possible position when it comes to getting an optimal rate on your mortgage.