Mortgage Loans: Improve Your Credit Score, Get a Better Mortgage
View PDF | Print View
by: marciafreeman
Total views: 59
Word Count: 473
A poor credit rating is a problem when you need to qualify for mortgage loans. You will have to pay higher interest rates, your fees may be higher, and you will get quite a few offers from predatory lenders. Instead of taking whatever youre offered and having to choose between mortgage loans with bad terms, spend a little time improving your credit rating. Then return to the mortgage market, and see how much better a deal you can make.
These tips will raise your credit score and make you more appealing to lenders:
* Pay down your existing debt. For a good credit score, you should be paying 40% or less of your total monthly income toward your debt. You current mortgage, all your credit cards, your auto payment, and your student loans all count toward your current debt. When calculating your debt to income ratio, lenders will add in the amount of the loan they are considering offering you, so not only your current debt, but also your debt after taking out the mortgage, should be under 40% of your monthly income.
* Improve the ratio of credit you have available to credit you have used. The more credit you have available, and the less you have used, the better your score will look. Improving the ratio involves not only paying down your existing debts, but getting new credit if you can. if you have a good relationship with your credit card companies, call them and ask whether they will raise the credit line on your existing credit cards. If you have a credit score that will allow you to take out new credit cards, apply for a new credit card. And dont close unused accounts! Once upon a time, creditors were advised to close accounts they hadnt used in a while, but now this tactic only decreases the amount of credit available to you and makes your score look worse.
* Review your credit reports, and if there is any inaccurate information or if there are black marks on your record that should not be there, dispute them immediately. Fixing mistakes and clearing up misunderstandings can increase your credit rating dramatically.
* Wait. Your credit rating is partly a function of time. The longer you spend paying all your bills on time and staying out of trouble, the better your credit rating will be and the more attractive you will look when you apply for mortgage loans.
Applying for mortgage loans with good credit is difficult enough. Poor credit can make the process agonizing. Before you apply for mortgage loans, tidy up your credit reports and improve your credit score, and make the process that much easier and more successful for yourself.
About the Author
Read more articles about mortgage refinancing, browse www.getsmart.com.
Rating: Not yet rated