A Higher Credit Score Could Be Your Next Step Towards Applying For a Mortgage<\/p>\n\n\n\n
When it comes to home buying, a credit score is a pretty heavy factor that will determine how qualified you are for the purchase by a lender. A credit score will play a large role in determining the interest rate you\u2019ll receive once you apply for a mortgage, which can include home loans, personal loans, credit cards, and other forms of credit. <\/p>\n\n\n\n
Taking the steps to improve a credit score is a process, and could take several months of consistent and healthy credit habits. Check out some of these tips to help guide you to that better score!<\/p>\n\n\n\n
One of the most important things you can do to raise your credit score is paying your bills on time. Payment history makes up to 35% of a FICO score<\/a>, which makes it such an important factor when determining a credit score. When you are able to keep up with credit card payments, you are showing your lender that you\u2019re able to take out a loan when the time comes and pay it back. Other than credit card bills, you also need to make sure other bills like utilities, medical bills, and even student loan debts are being paid on time. <\/p>\n\n\n\n Oftentimes life can get busy, but that is no excuse for forgetting to pay any of your bills on time. It\u2019s recommended for those more prone to forgetting to pay bills to use autopay, or set up automatic transfers from your bank account to your bills. By taking either of those steps, you can say goodbye to manual payments while also reducing the times you might miss payments.<\/p>\n\n\n\n Your credit utilization ratio<\/a> refers to how much credit you\u2019ve used that\u2019s divided by your total credit. It\u2019s recommended to keep your total utilization below 30%, with below 10% as the best. Making monthly payments on time can raise your credit score, on time payments will also help to keep your utilization low. Even if you can\u2019t afford to pay your credit cards in full each month, it\u2019s still important to be consistent with monthly payments. <\/p>\n\n\n\n If you\u2019re already carrying a bit of credit card debt, consider opening a credit card with a 0% APR intro period. Features of this credit card include:<\/p>\n\n\n\n The U.S. Bank Visa Platinum Card and the Citi Simplicity Card<\/a> are among the best introductory no-interest cards for balance transfers and new purchases. Look at where you stand in terms of credit score and take the time to look at your various options wisely.<\/p>\n\n\n\n It\u2019s important to keep up with where your credit stands when preparing for something like a mortgage. You can get credit reports from all three credit bureaus, which include Experian<\/a>, TransUnion<\/a>, and Equifax<\/a>. Here are some things to look out for once you receive your report:<\/p>\n\n\n\n Companies like FICO<\/a> and VantageScore<\/a> will not only look at the overall credit score, but also the number of credit inquiries such as applications for new financial products and the amount of new credit accounts a person is opening. Each time you apply for a new credit card\/loan, a hard inquiry will be run into your credit report that \u201cdings\u201d your credit. This can temporarily lower your score. <\/p>\n\n\n\n The only times you should go forward with a credit application are ones that are absolutely vital to your financial health. Before you apply for a mortgage, there should not be any new lines of credit opened for at least a few months beforehand. <\/p>\n\n\n\n When it\u2019s time to apply for a mortgage, you should be submitting your pre-approval application to a variety of different lenders. It\u2019s important to note that a credit file being pulled does not have any added damage on the credit score, it just has to be within a 45-day window. If you\u2019re looking to get through the pre-approval and submission process quickly, check out lenders like Ally Bank and SoFi. Ally Bank<\/a> is known to offer mortgage pre-approval in as little as three minutes, and SoFi<\/a> offers a mortgage application process that is completely online with fast pre-qualification.<\/p>\n\n\n\nLower Your Credit Card Balances<\/strong><\/h3>\n\n\n\n
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Continue to Check Your Credit Reports and Scores<\/strong><\/h3>\n\n\n\n
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Don\u2019t Open Too Much Credit<\/strong><\/h3>\n\n\n\n