Are You Considering Buying a Home? Boost Your Credit Score | Trusted American Mortgage

When you are a homeowner, you want the best loan terms possible. Who wouldn’t want the most bang for their buck when owning a home?

A good credit score can help you obtain a good home mortgage rate with the lowest interest possible. So, if you are thinking about becoming a homeowner in the future, now is the perfect time to start working on improving your credit score.

Our team at Trusted American Mortgage wants to share some tips about boosting your credit score so that you may achieve a low interest rate with your home mortgage loan.

The Facts About Interest Rate

Currently, the average home mortgage rate on the 30-year fixed-rate mortgage is 3.014%. But this number fluctuates all the time, and it’s important to remember that the rate you receive will be tied directly with your creditworthiness.

While your credit score needs to be at least 580 to qualify for an FHA loan, having a credit score of 680 or greater can have a beneficial impact on your interest rate when applying for a home mortgage loan. The higher, the better.

As a result, it is important to take action to raise your credit score as high as possible before applying for a home mortgage loan.

Take Action

Let’s take a look at ways you can boost your credit score:

First, if you are carrying any balance on credit cards, now is the time to pay them down. When your home mortgage loan is processed and your credit score is run, you want your credit utilization rate to be as low as possible. A good rule of thumb is to use less than 30% of your limit on any credit card.

Second, you want to be timely when paying your bills. While earlier is better, paying your bills on time every time can help boost your credit score. If you have issues paying your bills on time, consider setting up a payment plan online or putting an alert on your calendar to serve as a reminder.

Interestingly enough, while you want to maintain a low balance on your existing accounts, it’s also important not to cancel them. While you might think having fewer open accounts would be helpful, the reverse is actually true. Closing out an account lowers your overall credit limit, which negatively impacts your debt to credit ratio.

Finally, make sure there are no errors on your credit report. It is one thing if your credit is being lowered because of your actions. However, you don’t want your credit score lowered because of mistakes made on your credit history. You want to make sure to dispute those errors ASAP!

Our experts at Trusted American Mortgage are dedicated to helping you find the right funding for your home purchase and walking with you through every step of the process. Call us today and get a partner in the mortgage business!