Pointers To Improve Your Credit Info On Mortgage Credit Reports
If you want to buy a house, then having impeccable credit info is paramount. Credit scores range between 300 and 850, and that number will determine how much you will pay monthly and in the long run. According to www.MyFICO.com, a $200,000 house can be purchased by a couple with good credit scores (760-850) for $1,218/month on a 30-year fixed rate mortgage. By contrast, a couple with bad credit scores (500-579) can buy that same house for $1,801/month, meaning that they’ll end up paying $209,880 more than the couple with good credit. Of course, all mortgages vary, but this is just one example of how your scores affect how much you pay for things.
Once you know your credit scores, you can work out any blemishes before home shopping. This should be done six months to a year before you plan on buying. If you have a score higher than 700, you needn’t worry. If you’re in the 500s or 600s, then try to pull your score up 100 points to get the best mortgage interest rates. There are five ways you can do this in six months time. First, you can reduce your credit card balances down to 30% of their credit limits.
Secondly, you can cut your credit cards in half, but don’t cancel your account because you’ll lose points and increase the amount of available credit you’re using up. Thirdly, it can boost your credit score to mix up your credit portfolio. A healthy portfolio may include three unsecured credit cards, as well as a form of secured credit, which is like a student loan, auto loan, home equity loan or installment loan. Lastly, you can negotiate with all of your creditors to remove late payments, which can improve your credit overnight.
Once you’ve assessed and worked on your credit info listed on your mortgage credit reports, you can look at being pre-approved for a mortgage so there are no nasty surprises later. “If a buyer comes to me first, I’ll refer them to a mortgage company before we even start looking for a house,” explains realtor Tanikia Meeks. “That way, you become approved for a certain amount and a certain interest rate, and I know where we stand and what kind of house we can look for.” Shop around for your mortgage and look at two or three reputable, name-brand lenders, like banks or credit unions. Compare fees, total payments, taxes and insurance. Generally, you’ll want a 30-year fixed rate mortgage, yet if you can pay it off quicker, then do so!
Understanding how your credit info factors into your mortgage approval process is important. One of the biggest problems for many people is that they sell themselves short or feel they have limited options, even though there are many. Poor credit scores aren’t the end of the world. Do not seek a sub-prime outlet if your credit is in the 500s; instead, try to work on your credit portfolio and be patient.
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