Credit Enhancement: Improving Your Credit Score
People's Choice Mortgage
People's Choice Mortgage South Easton
Published on August 27, 2020

Credit Enhancement: Improving Your Credit Score

Many sectors of the economy have slowed down, but the real estate market is booming. The main reason why everyone is trying to purchase their dream home is that mortgage rates remain at historic lows. Buyers want to lock in low rates for the life of their mortgage while they can. While many people are jumping into new home purchases feet first, some are still sitting on the sidelines. One of the biggest factors for people who are not trying to buy a home is their credit. People are worried that their credit score is not enough to buy a home. Your score should not hold you back from getting the home of your dreams. All it takes is a little credit enhancement. The team at Peoples Choice Mortgage is educated on credit and how to enhance your scores in hopes you can take advantage of these low mortgage rates. 

Verify your mortgage eligibility (Oct 22nd, 2020)

Why is Improving Your Credit Score Important?

Improving your credit score will not only help you qualify for a loan, but it will also help you get favorable conditions. Your credit score will help lenders determine the interest rate on your mortgage. The better your credit score, the lower your rate. Credit score also impacts the size of your down payment. The higher your credit score, the smaller the down payment that will be required. Having a higher credit score will also mean that there are more lenders to choose from. Each lender sets their own standards for what is the lowest credit score they will accept. When you have a good credit score, you have the pick of the litter. This always works out in your favor. 

How Long Should You Wait to Talk to a Mortgage Professional? 

The benefits of enhancing your credit score when you apply for a mortgage are clear. However, that does not mean that you should wait until your credit score is perfect to speak to a mortgage professional. The perfect time to speak to someone about a mortgage is not when you are ready to buy a home. It is a few months before you are ready to buy a home. This gives you a chance to do what you need to do to enhance your credit and get the best rate possible. Mortgage professionals know the exact policies of the lenders they work with. This will help you set a target score to achieve before you fill out any loan applications. At Peoples Choice Mortgage we go to great lengths to help our clients enhance their scores. The sooner we begin the process, the better. 

Tips to Improve Your Credit Score

Even if you are not looking to buy a house in the near future, you still have every reason to work on credit enhancement. Here are a few things you can do to improve your credit score:

Verify your mortgage eligibility (Oct 22nd, 2020)

Pay Down Your Credit Card Debt

Paying down your credit card debt is one of the best ways to improve your credit score. Paying down your credit card balance helps improve your Credit Utilization Rate. This is a measurement of how much of a balance you have on your credit card versus your limit. Credit Utilization rate makes up 30% of your FICO score. The lower your Credit Utilization Rate the better your credit score. Your goal should be to have your Credit Utilization Rate below 30%, at a minimum. If you can get it below 10%, you will be in an even better position.

Set-up Automatic Payments

Putting your credit cards and other loans on automatic payments can help your credit score over time. Late payments negatively impact your credit score. Setting up automatic payments is a great way to ensure that you will never incur late charges or get reported for missing a payment. Set your automatic payments up to just pay the minimum amount. You can always go in and make a larger payment in addition to your minimum payment. The goal is to build a good payment history. 

Do Not Close Credit Card Accounts You Have Paid Off

Paying off the balance on your credit cards is great for your credit scores. However, once they are paid off, you should not close them. Closing your unused credit card accounts can actually hurt your credit score. Closing these accounts can negatively impact your Credit Utilization Rate because you now have a smaller overall credit limit.

Bottomline

There are many ways to enhance your credit and improve your credit score. If you are even considering buying a home, do not wait until your credit is perfect to speak to a mortgage professional. Let us use the tools at our disposal and our knowledge of the industry to help put you on the right path to getting a home. Contact us if you think you want to buy a home sometime in the near future. Remember, it is better to talk to a mortgage professional before you want to buy a home than it is to wait until the perfect moment. Get ahead of the game and put yourself in a situation to get the best rate possible. 

Show me today's rates (Oct 22nd, 2020)
People's Choice Mortgage
People's Choice Mortgage South Easton
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