One of the most important things you have to do when purchasing a home is to secure a mortgage! This is easier said than done as even the best mortgage lenders require you to present a good credit report. This is to ensure that they won’t be taking on too much risk by providing you with a loan. Now, you may be thinking that some mortgage lenders will provide you with a loan despite a subpar credit score. And while it is true that you may be able to secure a loan even with a bad credit score, this will subject you to unfavorable rates that may make your life significantly more difficult.
Instead of agreeing to rates that may be detrimental to your long-term finances, a better course of action to take would be to work on building a good credit report. This is easier said than done as there are a multitude of ways to approach this. To help you out, we thought it would be useful to put together a list of tips that will help you improve your credit score. If this is something that you want to learn more about, read on for a list of tips on how to build a good credit report for mortgage lenders.
Pay Off Credit Card Debt
One of the best things you can do to positively affect your credit score is by paying off your current credit card debt. Indeed, paying down credit card balances is the most direct way you can positively influence your credit score. Granted, you don’t have to pay for everything at once as reducing the debt will be of help to your credit score. With that being said, it is also worth exploring taking out a loan in order to pay off your debt all at once. While you may think it’s counterintuitive to take out a loan in order to pay off your debt, it could prove to be effective especially if the rates of the loan are more favorable than the rates of your credit card debt.
Pay Your Bills on Time
Aside from paying off your current credit card debt, paying your bills on time will also have a positive effect on your overall credit score. If you have a hard time keeping track of your bills, we suggest making use of automated electronic payments via your checking account so you can get on top of your bills with little to no effort.
Stop Applying for New Credit and Minimize Big Purchases
Lastly, you’ll want to stop applying for new credit and do your best to refrain from making any big purchases. This is especially true if you’re still paying off some of your credit card debt. Making big purchases while you’re in debt will negatively affect your debt-to-income ratio, which will hurt your credit score. A bad debt-to-income ratio lets mortgage lenders know that you may be riskier than other applicants.
Hopefully, these tips prove to be useful when it comes to helping you improve your credit score so that you can secure a mortgage with favorable rates. While this may seem like a lot of work, this will greatly help your financial well-being as it will save you from being subjected to rates that will make paying off your home extremely difficult. Once you’ve got your credit report ready, it’s best to find the best mortgage lenders available so that you can get rates that are right for your financial situation.
If you’re looking for the best mortgage lenders, then you’ve come to the right place. Waymaker Mortgage was founded in 2017 and has since been dedicated to helping our clients achieve the American Dream by aiding them with homeownership. For more information on what we can do for you, visit our website today.