Considering moving or refinancing your mortgage loan during the summer months? A good credit score is the first step in qualifying for a home loan or earning the favorable interest rate you need to afford a new house. Practically all home loan applications are score driven. While it admittedly takes a little bit of time to make a drastic improvement to your score, even a few points higher can save you money when getting a mortgage.
The first step to raising your credit score is to pull your credit report. Do not let your mortgage broker pull your report, do it your self so that you know what to expect. Every time your broker or another entity pulls your report it will affect your score but if you request a copy, there are no consequences.
Second, review your report and dispute any errors. If there is inaccurate information on your report or information you are unsure of, write a letter to the credit reporting agency and dispute any and all errors. Under the Fair Credit Reporting Act (“FCRA”) you have a right to dispute inaccurate information and the credit reporting agencies must investigate your dispute and respond within 30 days. Removing negative information from your report is a simple way to boost your score.
Third, pay down as much debt as possible. If you have cash available to put down on a home you are planning on purchasing, consider using some of it to pay down your debt. If you are carrying balances on your credit cards, paying off this debt is a fast way to improve your score. One of the factors used to determine your score is your credit card utilization rate, the amount you charge on your credit card compared to your credit limit. The higher your balance the higher your credit card utilization rate. Paying off your card balance will lower your rate and help you earn a more favorable rate on your mortgage.
Fourth, adding utility bills to your credit report if you are responsible when making payments can help boost your score. If your rental payments are a rather large part of your income as well as your utility bills, including gas, electric and cellular phone, incorporating them into your credit report can help boost your score and can also earn you a favorable interest rate.
The fifth and final way to improve your credit score is to utilize rapid rescoring. While there is no doubt that credit scores are constantly changing when information is updated on a consumer report, the concept of rapid rescoring was developed to allow a consumer to get a new score based on new information within a few days time. This concept is used exclusively with mortgage loan applicants and is a useful tool for a consumer who is just a few points shy of receiving a lower interest rate.
If you are in need of advice or assistance with your credit report and would like to speak with a licensed attorney, contact SmithMarco P.C. for a completely free case review.