Improve your credit score for a better mortgage rate
Having a good credit score is an essential factor when it comes to securing a good mortgage rate. A higher credit score can mean better rates, saving you thousands of dollars on your mortgage over the years. But if you’re struggling with your credit score, there are steps you can take to improve it. Private mortgage lenders share some tips and tricks that you can use to elevate your credit score and secure a lower mortgage rate.
Review Your Credit Report:
Before you start taking steps to improve your credit score, it’s essential to understand where you currently stand. The first thing you should do is review your credit report to get a clear idea of your credit history and identify any errors that could hurt your score. You are entitled to a free credit report from major credit bureaus. Go through each report carefully.
Dispute Any Errors:
You may not even realise it, but errors on your credit report can significantly impact your credit score and, in turn, your ability to secure a better mortgage rate. So review your credit report and identify any inconsistencies or inaccuracies.
These could include accounts that aren’t yours, incorrect balances, or outdated information. Once you’ve identified any errors, contact the credit reporting agency to have them corrected. This can often be done online, making the process quick and easy.
Lower Your Credit Utilisation Rate:
Your credit utilisation rate is the amount of credit you are using compared to the amount of credit you have available. To improve your credit score, you should aim to keep your credit utilisation rate below 30%.
If your credit utilisation rate is high, you can work to lower it by paying down your balances or increasing your available credit. You can also try spreading out your spending over multiple credit cards instead of relying heavily on one.
Make Your Payments on Time:
Bank lenders look at your ability to make payments on time as an indication of your creditworthiness and financial responsibility. Late payments, missed payments, or defaulted payments can damage your credit score and negatively impact your chances of getting a better mortgage rate. To avoid any payment mishaps, it’s essential to prioritise your bills and make payments on time, every time.
Don’t Open New Credit Accounts When Applying for Mortgage:
New credit accounts can cause your credit score to dip temporarily as they appear as a hard inquiry on your credit report. When you’re in the process of applying for a mortgage, it’s important to keep your credit score stable and avoid any unnecessary changes that could negatively impact your credit.
A good credit score can help you secure a lower mortgage rate, so it’s essential to make sure you have a strong credit rating before applying. If you need more assistance, talk to the expert private lenders for home loans at Landen today!