Your Credit Score is So Important… You Can Help Yourself!
So many people ask me, “What is the rate? What program do I get?”
Well, as I have written in the past, everyone’s situation is personal and unique. Before I get into the lending side, I want to remind you that your credit score doesn’t just affect your mortgage program. It directly impacts:
- Your credit card interest rates
- Interest rates when purchasing a car
- Your car insurance and homeowners’ insurance
- Your ability to rent an apartment
- And so much more!
What Affects Your Credit Score?
The three major credit bureaus calculate your credit score based on multiple factors. Here’s what affects them and what you can do to improve your score:
1. Paying on Time
Making on-time payments is one of the most crucial factors in maintaining a strong credit score (over 740). Avoiding 30-day late payments is key!
- Recent late payments hurt your score more than older ones.
- What you were late on matters! A late mortgage payment will affect your score much more than a late payment on a department store card.
So, pay your mortgage, car loan, and major credit cards on time to keep your credit score high.
2. Reduce Your Credit Utilization Ratio
What’s that? Simply put, it’s the amount of outstanding debt you have compared to your credit limit.
For example:
✅ Better: A $4,000 balance on a credit card with a $10,000 limit (40% utilization).
🚫 Worse: An $8,000 balance on a card with a $10,000 limit (80% utilization).
Credit agencies like to see that you have the ability to spend $20,000 across all your credit cards but only use less than $10,000.
3. Diverse Credit Mix
A healthy credit score benefits from having a mix of different types of credit, such as:
- A mortgage
- A car loan
- A major credit card
- A store credit card or minor credit line
4. Limit New Credit Applications
Applying for new credit too often can lower your score. However, not all credit pulls affect your score the same way.
- When applying for a mortgage, your credit score may dip a few points but usually rebounds within 30 days.
- Car shopping tip: Get your credit pulled once, then take that report to different dealerships before allowing them to pull your credit.
- Avoid opening multiple new credit cards in the same month—this can hurt your score!
Take Control of Your Credit Score
Don’t wait to improve your credit score before reaching out to me! There are plenty of loan programs available for credit scores as low as the 600s and even lower.
Whether you are purchasing or refinancing, I can help tailor a mortgage program to fit your needs while guiding you on improving your credit.
When it comes to your credit score, you “drive the bus!” Take control and make smart decisions today!
