Your credit score will influence your mortgage options as well as the interest rate you will get. If you’re thinking of buying a home in the future, don’t take chances! These steps can help you improve your credit score now so you’ll have more mortgage options later.
- Don’t over use your credit cards! Ideally credit card balances should be paid in full each month to avoid finance charges. If you do carry a balance, then owing about 30% of your credit limit (or less) will get the most points on your credit score. When used conservatively, people only charge on their credit card an amount they can pay so the balance isn’t going up. Having a balance that exceeds the credit limit can cause a big dip in your credit score while paying down credit cards will improve your score.
- Have enough credit and don’t have too much credit. To get the best scores, you should have at least 3 different open accounts showing on your credit report. Three – seven open accounts is a good amount. Generally it’s best not to open or close any accounts but if you have less than 3 accounts open, open a third! If you have more than 7 open accounts, consider consolidating.
- Pay everything on time! even a single late payment can really cause your score to plunge. try setting up automatic payments to cover the minimum do so you never miss a due date by mistake — and make additional payments at will to keep the balance down! If you know you have a score below 680 then you may be asked to prove you made your rent payments on time for the past 12 months. So start keeping track of those rent checks as you pay them!
- Save some more money! for most people buying a house means their next mortgage payment is bigger than the one they’ve been paying… theoretically you should be easily saving the difference between your current rent and what your new payment will be. The more cash you have, the more options you have! There are many ways to reduce the amount of money you need to purchase a home including negotiating for the seller to pay some of your closing costs, lender credits and cash assistance. Your Merrimack Mortgage Company loan officer can review these options with you.
- Know your options! Find out what your mortgage options are now and what specific actions you may be able to take to qualify for additional mortgage options and/or for better terms later.
At Merrimack Mortgage Company, we help you plan for your future mortgage before you even sign a sales agreement.
Call us for a free consultation or apply online to jumpstart the conversation.