5 Ways To Improve Your Credit Score For A Mortgage

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If you are planning to buy a home, but your credit score is low, this may impact whether you get a mortgage. Even if you do get a mortgage, you may end up paying significantly high-interest rates. Now is the time to contact our mortgage services in Coconut Creek about a mortgage, as rates are at a historic low. The rates will likely stay low for a while, but you will need a high credit score to benefit. If your score isn’t where you want it, here are some effective strategies to improve it.

Check Your Credit Score

If you haven’t already done so, the first thing to do is check your credit score. Many homeowners who take out mortgages have a median credit score of 786, however, a good score ranges between 670 to 739. Once you know what score you want, you have to see how far you must go to achieve it. You’re allowed one free credit report every 12 months, so make sure to run a report, too. Checking your score and running reports is something you should do annually, so don’t skip this step while you’re managing your score. It’s important to always know where you stand, particularly if your financial situation changes.

Another important thing to remember is that you have many credit scores, but your FICO score is generally used by most lenders.

Check For Mistakes

Another reason you want to check your credit score routinely is to make sure no mistakes have been made that negatively affect your score. If you find errors, such as incorrect late payments, it’s important to dispute them as soon as possible. Take your dispute to the correct credit bureau and creditor, explaining your reason for the dispute, backing it up with the necessary documentation.

Before you contact Ace Mortgage for a loan, make sure to close your disputed account, as it can impact the accuracy of your credit score.

Pay Your Debts

Even if you don’t completely pay off your debt(s), it’s important to have a low balance, so it doesn’t negatively affect your FICO score. 

What exactly does a low balance look like? At least 30 percent of your total credit limit can make a significant difference to your credit score. You will have a much better chance at securing a loan at a mortgage company in Coconut Creek when your credit cards have a low utilization rate.

Pay Your Bills On Time

Make sure you don’t miss or make any late payments, as this can hurt your score and there is little you can do to recover from this. One of the simplest ways to avoid this is to automate your payments. The funds will automatically be removed from your account when the payment is due. Again, you should also review your credit report to make sure no errors were made.

Don’t Overuse Credit

It’s advised not to apply for credit unless you absolutely need it. When you do, you should keep your available credit below 30 percent, more if you can. If you depend on your credit card for financial support, it may be time to improve your household cash flow.

Alternative Ways To Boost Your Score

Bring up your credit score by having recurring expenses that aren’t typically added to your score reported. These include:

  • Phone bill
  • Utility bill
  • Cable bill
  • Rent
  • Subscriptions

The downside to this solution is that it likely will not work for government-backed mortgages.

Final Thoughts

Increasing your credit score will improve your chances of securing a loan, so be very intentional in your efforts. The most important things you can do to lower your score and keep it low are pay your bills on time, keep your credit card balances low, and only apply for credit when necessary.

Contact Ace Mortgage

Established in 1996, we have helped homeowners throughout South Florida achieve their American Dream and navigate the mortgage market. Our knowledgeable and friendly staff will make sure to put your needs first during the mortgage process. Lockdown your ideal mortgage today and contact our mortgage services in Coconut Creek. Call today at (954) 371-2165.

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