As we all know interest rates and most importantly mortgage rates are at all time lows. Providing a great opportunity for home owners, new buyers and investors alike, to borrow for our mortgage at a great interest rate.
To be able to take advantage of these great rates one of the things we need to do is make sure is that our credit score and credit rating is in order. Here are some simple tips and information to help you maintain and improve your credit rating.
Understanding Credit Scores & Ratings-
Your credit score is a report maintained by the major credit reporting agencies (Equifax & Transunion), used by lenders to evaluate the likelihood of you repaying a loan or loans, as compared with other consumers. Equifax and Transunion, measure your credit score on a scale between 300 and 900, the higher the score the better, the higher your score the better you look to lenders and the greater your chance of being approved for a loan. The score is created based on a number of variables by making small changes to some of these items you can increase your credit score and better your ability to borrow at low rates.
Review Your Credit Report-
The first step to improving and maintaining your credit rating, is to review it. It's important to know what shows on your credit report. Sometimes there are errors on your report, which could be negatively affecting your credit rating, these can be fixed but it takes time so take the first step immediately and request your report right away. You can request your report online for a small fee, through the major credit reporting agencies or via mail, (How to order credit report).
Once you have determined there are no errors, or you have taken steps to fix the errors, there are other measures you can take to improve your credit score.
Improve Your Credit Score-
- One of the most important things you can do to maintain a strong credit score or to improve a weak score is to make sure you pay your bills on time,esepcailly credit cards and bank debts several companies report payment history and late payments to credit agencies and even a small late payment, can have a severe negative impact.
- Try to pay your bills in full by the due date, this will have a great positive impact to your credit rating, if however you aren't able to then at least pay the required minimum amount shown on your bill or statement.
- Be very careful to be aware of your credit limits on your credit cards and line of credits and to not go over them. Try to keep your balance well below the limit. The higher your balance, especially in proportion to the available balance the more impact it has on your credit score.
- Be careful with the number of credit applications you make, as we all know we are quite often offered pay later, or bonus credit cards, etc... these are all credit applications every application we make affects our credit report. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. Even applying at several banks when looking for a mortgage can have large negative effect, so be careful on who and how often you do a credit application. Note, your score does not change when you ask for information about your own credit report.
- Make sure you have a credit history, you may never have borrowed money and have a great income and the ability to repay but if you don't have a history of credit use, you may have a low score. So building a credit history is important and can be done through the use of a no fee credit card and be sure to pay it full very month to make sure you incur no fees.
Your Credit Report, Score and Rating is so important, in enabling you to get approved for a mortgage and take advantage of these low rates, be sure to act now and Review your Credit Report to make sure you have no surprises later.