High Credit Score---------->Low Mortgage Interest Rate

by Vega Pao 02/12/2019

How importance is credit scores when it comes to buying a home? Along with your down payment, your credit score can be a deciding factor of getting approved and securing a low interest rate.

Credit can be complicated. This post today is to suggest ways to give your credit score a quick boost, so you can significantly increase your score in the months leading up to applying for a loan.

Should I focus on increasing my score or save for a down payment?

As a general rule, it’s better to pay off smaller loans and debt before taking out larger loans. If you are planning to pay off multiple loans that are around the same balance, it makes sense to focus on the one has the highest interest rate.

For the low-interest loans that you can easily afford to continue paying while you save, then it’s often worth saving more for a down payment.

Remember you can avoid paying PMI (private mortgage insurance) if down payment is 20% or more for a conventional loan  This will save you quite a bit over the span of your loan.

 

 

 

 

 

 

 

 

Starting with no credit

If you never had a credit card or credit history, it’s time to start applying one or two. Look for the card gives good rewards and use it for your everyday expenses like groceries. Then, set up auto-pay of the balance in full each month to avoid paying interest and penalty. Overtime you are on your way to build up credit.

Correct credit report errors

The main credit bureaus will have a slightly different method for calculating your credit score. You’re entitled to one free report from each of the main bureaus each year. Take advantage of these free detail reports to keep track of your credit score.

Identity theft is on the rise! Make sure to go through the report line by line to check if there aren’t any accounts you don’t recognize for scammers or even a family member who has taken out a line of credit in their name.

Avoid opening several new accounts

Our final tip for boosting your credit score is to avoid opening up multiple accounts in the 6 months leading up to your mortgage application. It can be a red flag to lenders that you might be in the midst of financial hardship and consequently can temporarily lower your score.

About the Author
Author

Vega Pao

My life and work experiences taught me the skills of effective communication with others, unique problem solving abilities, astute attention to detail, and the art of thinking resourcefully.

I help family moving forward whether first-time buyer achieving homeownership dream, empty nester downsizing or investor looking for residual income. I view buying and selling property as a team effort between buyer/seller and real estate brokerage. Having a knowledgeable, experienced and caring real estate agent on your side can help make the process a breeze.

I believe our home is our sanctuary, a place where we can experience ourselves most authentically. It's a powerful tool of self-expression consciously or subconsciously. I'd like very much the opportunity of helping you find the home that will reflect your own unique individual personality. I am trained and certified as a Classical Feng Shui specialist. I also fluent in Mandarin (Chinese), read, write and speak.