Strategies to Increase Your Credit Score for Mortgage Approval

Strategies to Increase Your Credit Score for Mortgage Approval
By Anna Tai

HOW TO INCREASE YOUR CREDIT SCORE AND BECOME A BETTER CANDIDATE FOR MORTGAGE APPROVAL

Your credit score is just one of the factors your mortgage lender will use to determine whether you qualify for financing. The problem is every lender uses different methods to determine your credit worthiness. So, in some cases, a minimum score is difficult to determine for conventional loans.

1. Pay Down Your Credit Balance and Pay On Time. If possible, pay off the entire balance every month. Set up automatic payment with your bank to pay off the full balance automatically. Use no more than 30% of your credit limit. One of the biggest ingredients in a good credit score is simply month after month of on-time payments.

2. Gather up all credit cards on which you have only small balances and pay them off. For bigger balance, consider paying off your loan with a lower interest rate credit card or line of credit, so you can pay off your loans faster. Once you pay off, most of your loans, choose one or two cards that you will use for everything. Avoid store credit cards.

3. Leave old debt and good accounts (debt that you've handled well and paid as agreed) on as long as possible. This is also a good reason not to close old accounts where you've had a solid repayment record. The longer you have the accounts the better it looks on the credit reports, as credit history is one of the area that credit reporting companies look at.

4. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lenders are counted as one inquiry if submitted over a short period of time.

5. Don't open new credit card accounts before applying for a mortgage. Too much available credit can lower your score. This is true for department store or any retail store cards.

6. Do not do anything that could indicate current or future money stress, such as missing payments and suddenly paying less (or charging more) than you normally do, taking out cash advances, or charging at a pawn shop or divorce attorney.

7. Correct any errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.You should check your credit report every 6 months or at least once a year to check form errors and possible identity theft.

Check out http://perfecthomeshonolulu.com/ to learn more about home loan financing and everything and anything you need to know to own and invest in Honolulu real estate.

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