Finding ways to improve your credit can help you get a better rate on your mortgage. How? Credit is a huge factor for whether you qualify for a particular mortgage, and what kind of rate you get. Lenders will always look at your credit to determine what they can offer – but how can you look the best you possibly can? We’ve gathered some everyday tips that will hopefully help you out.
Tips to Improve Your Credit:
- Avoid opening lots of credit cards at one time. It’s easy to open up new cards, especially this time of year, when every department store can give you credit card with their name on it. And it sounds tempting. But be careful – even getting a department store credit card will show up on your credit report, and the more inquiries you have over a short period of time, the more it lowers your score.
- Avoid closing all your cards at once. Don’t let the above point make you panic. Lenders generally look for you to use less than 30% of your available credit. So having a bunch of credit cards doesn’t actually hurt you – it’s the inquiries we’d suggest avoiding. If you close a bunch of cards at once, you may go from using well under 30% of your available credit to well above that. If you’d like to close some of your cards, trying closing one every six months to a year.
- Big, Shiny, NOPE. Try to avoid making big purchases when you’re looking to buy a house. If you’re looking to buy a car for example, wait until after you purchase your new home. Making big purchases can raise a lot of questions when lenders go in to look at the flow of money in and out of your account.
- Understand debt-to-income ratio. This is a tool lenders use to evaluate you. Generally, try to keep your debt under 50% of your income. Check out this article if you’d like to find your debt-to-income ratio.
We hope these tips help you take some easy steps to improve your credit! And if you’re looking for a lender that’s faith-based and has the family values that are important to you, give us a call! We’d love to help you find the perfect home for you and your family.
The Christian Mortgage Mom