11/10/2023
Your credit scores can have a significant impact on your mortgage rates. The disparity can be as substantial as 1.5% between a FICO score of 620 and one exceeding 760+, which could translate into paying several hundred dollars extra each month.
While it’s true that many lenders are open to accepting credit rescores, a technique through which borrowers can instantly boost their credit scores by providing proof of positive account changes to the three major bureaus, during the mortgage application process, it’s still advisable to take steps to improve your credit scores at least six to 12 months before you plan to apply for a mortgage.
Here are the steps to improve your credit score:
1. Get a free copy of your credit report annually from each credit reporting agency via annualcreditreport.com.
2. Ensure on-time payments of your bills.
3. Reduce the balances you carry on your credit lines – ideally to 30% of your total credit line or less. You can request a credit line increase to help maintain balances within this range.
4. Avoid opening new accounts, as they may produce hard credit inquiries and lower your scores.
5. Avoid closing older accounts, as they may still contribute positively to your credit history with the bureaus.
