When applying for a mortgage, one of the most important factors that lenders consider is your credit score. A good credit score can mean a lower interest rate on your mortgage, which can save you thousands of dollars over the life of your loan. But if your credit score is less than perfect, don’t worry – there are things you can do to improve it before applying for a mortgage.

1. Check your credit report for errors. The first step in improving your credit score is to check your credit report for errors. You can request a free credit report from each of the three major credit bureaus – Experian, Equifax, and TransUnion – once a year. Review your report carefully and look for any errors or inaccuracies. If you find any, contact the credit bureau and the creditor to have them corrected.
   
2. Pay your bills on time. Payment history is one of the biggest factors that determines your credit score. Late payments can have a negative impact on your score, so make sure you pay all of your bills on time, every time. If you’re having trouble keeping track of your bills, consider setting up automatic payments.
   
3. Reduce your debt. Another important factor in your credit score is how much debt you have compared to your credit limit. This is known as your credit utilization ratio. To improve your score, aim to keep your credit utilization ratio below 30%. If you have a lot of credit card debt, consider paying it off or consolidating it to lower your ratio.
   
4. Keep old accounts open. Length of credit history is also a factor that’s taken into account in your credit score. The longer your credit history, the better your score will be. So, even if you don’t use an old credit card, it’s a good idea to keep it open.
   
5. Limit new credit applications. Every time you apply for credit, it can have a negative impact on your credit score. So, avoid applying for new credit or loans unless it’s absolutely necessary.

Improving your credit score takes time and effort, but it’s worth it in the long run. By following these tips, you’ll be on your way to a better credit score, which will help you qualify for a lower interest rate on your mortgage. Remember that the process of improving credit score is a long-term one and it could take a few months to see a significant change.

In summary, a good credit score is a crucial factor when applying for a mortgage. By reviewing your credit report, paying your bills on time, reducing your debt, keeping old accounts open, and limiting new credit applications, you’ll be able to improve your credit score and increase your chances of getting approved for a mortgage with a lower interest rate.

Work with Modern Lending

If you are looking into buying a home but don’t know where to start, look no further than Modern Lending! We have a team of professionals loan officers who are all extremely knowledgeable in their field and can help you secure the best line of credit possible. Reach out to us today for more information on how to get started! Verify my mortgage eligibility

Mike Fensterer | Sr. Loan Consultant NMLS 1666142

Contact via email @ mike.fensterer@modernteam.com