Improving Your Credit Score to Get the Best Interest Rates

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The Karlton Govan Lending Team is committed to providing you with information and resources to get the best home loan for you. Did you know your credit score can play a major role in the interest rates on a loan for your next home? The higher your credit score, the lower your interest rate could be. 

Credit scores range from 350-800. If you don’t know what your score is, check in, in preparation for applying for a home loan. 

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Find out what your score is. Visit any three of the credit reporting agencies: Experian, Equifax or Transunion or access your FICO Score directly, which is the score 90 percent of lenders use to determine creditworthiness. These scores can be assessed at a cost, but you can also visit sites that provide scores free of charge. 

Also note that every creditor doesn’t report credit activity to all three credit bureaus so your score could vary for each bureau. Pay all of your bills responsibility to cover all ground. 

If you determine that you need to increase your score for an optimal interest rate, consider the following steps:

Pay your bills on time. When a payment is 30 days late, there’s a chance it could be reported to credit reporting agencies as a missed payment. A late or missed payment could result in a significant drop in your score. Pay primary bills on time or atleast within a grace period, if offered by your creditor. 

Only apply for credit as needed. The number of credit inquiries you approve can affect your score. If you are shopping for items that require multiple quotes, such as auto loans or insurances, make all inquiries within two weeks to lessen the impact. 

Note how much credit you are using. How many credit accounts do you have? Take stock and only use credit when necessary to balance your debt-to-income ratio. 

Check in with your creditors. If paying key bills is a challenge, contact your creditors to set up a payment plan, change your due dates or apply for hardship services. Get more tips on how to build your credit on our blog

REMEMBER…

Crediting reporting and scoring update at the end of every month. As an example, after aggressively paying down debt, you likely won’t see the impact reflected in your score until the following month. 

You can do it yourself. Before paying a company or individual to “clean up your credit,” consider doing the work yourself. Free resources for credit repair are available online. 

Still need more information on what you can afford to pay for a home? The Karlton Govan Lending Team can help! Use our mortgage calculator to determine your monthly mortgage payment. Complete the application to pre-qualify for a loan here.