Get Better Mortgage Terms by Improving Your Credit Score

Get Better Mortgage Terms by Improving Your Credit Score

Thinking about buying a home? By taking a few preliminary steps in the months before home shopping, you can save thousands of dollars in interest.

Interest fees are based upon your credit score. By taking a few simple steps, you can dramatically improve your credit score over a few months.

Start by ordering your free credit report from all three major reporting agencies. Review all the listings. Be on the lookout for mistakes, inaccuracies, and duplicate listings, as well as debts over seven years old. Promptly contact the agency to correct any errors. They are required to confirm listings within thirty days or remove them from the report.

While you're waiting for the agency's response on disputed debts, review your credit card balances. You may think that a credit card "paid in full" provides the best reference, but it is more effective to show card being used responsibly. Thus, the optimal balance is about 50% of the credit limit.

Next, look for any major debts in good standing that are NOT listed on the credit reports, and contact the creditor to request that they report your good payment history.

Finally, be prepared to explain any negative items on your credit report to a potential lender in terms of a) how it happened, and b) why it won't happen again.

There are services that you can use to obtain your actual credit score. Most of these require a monthly membership fee, but you can usually join on a trial basis and then cancel the membership.

Do not fall victim to credit repair scams, consolidation loans, or unethical credit counselors. Most credit repair scams operate by sending form letters disputing all negative items on a credit report, hoping that the agency will be unable to meet the thirty-day deadline and drop the negative listings from the report.

Consolidation loans may appear to be a good solution, combining all your debts into one easy payment. However, it's often tempting to use the paid-off credit cards, ending up owing payments on both the consolidation loan and the credit card accounts.

Be sure to check the references of credit counselors. These often work by combining outstanding debts and establishing a single payment to the agency. They then negotiate lower payments with creditors. Unethical counselors charge huge fees for their services, reducing the amount available to pay creditors.

When you are ready to shop for a mortgage, talk to loan officers before applying. For example, if one of your credit reports list a number of negatives, but another doesn't, it will help to know which reporting agency the lender uses. If you know there could be a problem, discuss it openly and honestly. Too many inquiries in a short period of time can have a negative effect on your credit score, so try to find the lender most likely to approve you on the first try.

POST COMMENT

How To Make A Credit Card Resolution You'll Keep Credit Card Debt Help - How to Significantly Lower Payments and Eliminate Credit Card Debt Never Pay Back Half of Your Credit Card Debts - An Easy Option to Eliminate Credit Debt Need Debt Help? - Debt Consolidation Loans Vs. Credit Counseling Rebuild your credit through a Prudent Loan Credit Card Debt Elimination - How To Finanlly End Your Debt Stress Debt Settlement Program - Find Credit Counseling Before Committing to a Debt Settlement Program How to Get Rid of Credit Card Debt Through a Legitimate Debt Settlement Process Credit Card Solutions - Debt Settlement a Legitimate Option For Debt Relief? The Best Debt Relief Solutions For Consumers With Massive Credit Card Debts Proven Tactics to Eliminate Credit Card Debt - Debt Settlement 2010 Credit Counseling to the Rescue Can't Pay Back Credit Debts? - The Best Options If You Have Massive Credit Card Debts