If you want a good mortgage rate, better pay attention to your credit scores. Many things influence your score: your debts, your lines of credit, your behaviors as a borrower, and more. Depending on whether your score is high or low, you can secure a good mortgage if you have good finances. This week, Professional Mortgage Solutions in Rego Park, NY is here to explain how your credit score impacts your mortgage rates.
How Credit Scores are Used in Mortgage Applications
Lenders will look for a higher credit scores, this can improve your chances for getting approved and for getting lower interest rates. The first step is to get pre-qualified or pre-approved for a mortgage. During this process, pulling your credit score is required. This is not the only thing reviewed in getting mortgage approval, but it is important.
Reviewing Your Credit Score
Establishing credit scores is highly regulated in this market. There are three different national credit bureaus that calculate your credit score: Experian, Equifax, and TransUnion. Each bureau may have a different method for running your credit, but these methods must be consistent.
There are plenty of sites to review your credit scores from these agencies using what is called a “soft pull” on your credit. If you have a lot of debt, and your credit score is low, then talk to credit counselors before buying a home. You may be able to consolidate and pay down some of your debts and improve your worthiness as a borrower.
A lender will review your credit scores, your income, your taxes, or other assets. If your score is in the 700 and above range, it is considered good to excellent. If your score goes downwards, this can indicate that you are a moderate risk to a mortgage lender. Many lenders do not like to see any scores around 620 or below. If it does not seem like you will get a great deal for your mortgage, consider changes to improve your score by just 20 to 100 points.
Raising Your Credit Score
If you have a low credit score, and want to improve it, below are some great tips:
- Look into consolidating your debt to lower interest rates and pay it off quickly.
- Use an older credit card that was left untouched for a while can make a minor boost to your score, if you pay if off right away.
- Review your credit history and contact companies to repair credit, be sure you are also not a victim of identity theft.
Professional Mortgage Solutions works with home buyers of all backgrounds in Rego Park, NY—contact our team today for more assistance with securing a mortgage.