Enjoy Favorable Mortgage Loan Terms by Improving Your Credit

Posted by Murphy Realty Group on Tuesday, April 10th, 2012 at 10:08am.

Credit ScoreIf you are interested in purchasing a home, one of your biggest concerns is probably related to cost. After all, purchasing a home involves making a significant investment and taking on a responsibility that will last for years. Whether interested in Chevy Chase real estate or a home in Ulster County, you want to be sure to get the best price possible while also keeping your interest rate down. In order to increase your chances of getting a low rate and enjoying other favorable terms, it is in your best interest to take steps now to start improving your credit. Since your credit rating will have a significant impact on the terms that you receive, here are five things you can start doing today to improve your credit rating.

Tip #1: Pay Bills on Time

The simplest step you can take to improve your credit rating is to simply pay your bills on time. By doing so, you avoid having negative marks on your credit report that can bring your score down. If you are having problems with paying a particular bill, contact the creditor ahead of time to work out a payment plan. This way, you can avoid running into trouble with your credit rating.

Tip #2: Check Your Credit Report

Even the smallest mistake on your credit report can have a significant impact on your credit score. As such, it is a good idea to check your credit report once per year in order to check for mistakes. If you find errors in reporting or information that you don’t agree with, contact the credit reporting agency and take the steps necessary to get your report corrected.

Tip #3: Reduce Credit Card Balances

Carrying a large balance on your credit cards will bring your credit rating down. In fact, carrying $8,000 on a credit card with a $10,000 limit will hurt your credit more than carrying $4,000 in debt on two separate credit cards with a $10,000 limit. While you are carrying the same amount of total debt, it is best to keep your debt to less than half of the total limit of any particular credit card.

Tip #4: Pay Off Debt

Paying off your debt is even better than reducing your credit card balances. If you have the financial means to do so, it is a good idea to pay off at least some of your debts before you start shopping for a house.

Tip #5: Don’t Close Accounts

If you have unused credit card accounts, you may be tempted to close them. If you have had these accounts for some time, however, you should keep the accounts open and active. If you close an account, you lose all of the positive history that comes with it. Rather than close the account, use it on occasion and be sure to pay it off at the end of the month. By keeping your account active, you continue to build positive history with your credit card.

About The Author - Kevin Koitz specializes in Maryland luxury homes as a Realtor with The Koitz Group, based in Maryland.

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