Tips for Improving Your Credit

Having a good credit score will likely mean a better interest rate with your home loan. Lenders view borrowers with higher credit scores as lower risk compared to borrowers with poor credit history.

If your credit is less than perfect, here are a few things you can do to adjust your score and become more favorable to a lender.

• Pay off all past due balances and charge-offs that have occurred within the past two years. Charges older than two years have little effect on your current credit score.
• Do not close existing credit card accounts, even if you do not use them. A portion of your credit score is based on your credit history and leaving them open gives you the benefit of the history they represent.
• While it might not be possible to pay off all credit cards, it might be possible to adjust the debt on some of them to keep your debt below 30% of the available credit on each card. If not, see if the credit provider will increase the amount of credit so your balance falls below 30% of the limit.
• Obtain your credit report at least a month in advance of applying for a loan. If you have items showing up on your credit report that you know have been paid, request that these items be removed. Credit bureaus normally work to fix the report within 30 days if a request is made.
• If a married couple applies for a loan and one spouse has better credit than the other, that individual can be designated as the sole borrower on the loan, but ownership of the home can still be placed in both names. Doing this could decrease the interest rate of the loan, but it could also change the amount you will be approved to borrow.

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