There is a good chance buying a house will be the most expensive purchase you will ever make, rendering your mortgage one of the biggest debts you will ever incur. However, before you even think about buying a house, you will want to plan for it by getting your credit score as high as possible. Generally speaking, a higher credit score will not only improve your chances of being approved for a mortgage but may also help secure a lower mortgage interest rate.
Here are a few tips to help you get your credit score in order before applying for a mortgage:
- Get Negative Items Removed from Your Credit Report – Examine your credit reports carefully to see if you have any negative items such as late payments, collections or charge-offs that could be lowering your credit score. If you do, the best course of action is to write a goodwill letter to the original creditor basically asking for forgiveness out of the goodness of their hearts. This is surprisingly a very successful strategy, given you can plead you are a good and loyal customer who either ran into unfortunate circumstances or who has taken full responsibility for a lapse in judgment.
In the goodwill letter, include the reason for the request (you are applying for a mortgage), the circumstances surrounding why a payment was not made, and a request for the item be forgiven and removed from your credit report. There are many templates of goodwill letters available online for you to use as examples.
- Pay Down Your Credit Cards – You have a better chance of getting approved for a mortgage if you can keep you credit card balances under 15% of your available credit. Having credit card balances close to their limit makes lenders wary that you can afford to take on any more debt. This applies both to individual cards and your overall balance-to-limit ratio. For example, if your credit limit on your VISA card is $1000.00, you will want to try to keep your balance under $150.00.
- Don’t Apply for New Credit – Every time you apply for a loan, credit card or mortgage, the lender will check your credit report. Each inquiry shows up on your credit report as a hard inquiry and tells other lenders you are shopping for credit, which is not favorable if you are also seeking a mortgage. Additionally, hard inquiries can lower your credit scores, translating into higher interest rates when you borrow. Resist applying for any other loans or credit cards if you plan on applying for a mortgage anytime soon to avoid penalization from your potential mortgage lender.
Preparing your credit score to apply for a mortgage is just as important as the application process itself. If you have more questions or think you need more guidance, it is best to consult with professionals such as Great American Credit Repair Company who can guide you in the right direction.
About Great American Credit Repair Company
Great American Credit Repair Company…….because you deserve a fresh start! Call us today at 1-800-603-1943 for your FREE consultation. Our financial experts will work diligently on your behalf to raise your credit score and repair bad credit. We are attorney-approved and offer the industry’s only Money Back Triple Results Warranty to protect your investment.
How does Great American Credit Repair work to restore your credit? Approximately 79% of all credit reports contain errors and aren’t verifiable. At Great American Credit Repair Company, we have proficient understanding of the rules Credit Bureaus are bound to and how to resolve common but substantial threats to your credit score. We know most people don’t earn the credit score they deserve and will investigate every negative aspect of your credit report every single month to make sure you get the highest credit score possible.
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