Our mortgage lender in Osage Beach, MO knows how impactful your credit score can be when purchasing a home at Lake of the Ozarks. Last week we talked about how your credit score can impact your mortgage interest rate and this week we're diving into ways you can improve your credit score. A better credit score receives a better interest rate on a home loan. A few percentage points better can make a big impact over 30 years! Learn what steps you can start taking now to improve your credit score to prepare to buy a home at Lake of the Ozarks.
Pay Bills in a Timely Manner
Making your payments on time is an important factor that goes into determining your credit score. Stay current on any bills you owe and make sure your payments are received before or on the due date to avoid a potential penalty.
Check Your Credit
Your credit score fluctuates as changes are made to your financial situation over time. It's important to keep an eye on your score. If there is a big change, it's worth investigating what caused that change. If there is an item that is bringing your credit score down, there are options for counteracting those dings to your credit.
Make an Effort to Pay Down Credit Cards
The amount you owe on revolving credit is a big consideration for your overall score, as well. If you owe a large amount on a credit card, take those extra steps to get it paid down, if at all possible. You'll be surprised at how much in interest you save when you start paying that total down!
Improve Credit Utilization Rating
A big portion of your score is based on your credit utilization rating. This is the ratio between what you owe on credit and your credit limits. It's ideal to keep a balance of about 30% (or less) of your total credit limit on a card. If paying your balance down quickly isn't a realistic option, it can be helpful to raise your credit limit to increase that credit utilization score. Consult the advice of a professional before making changes to your credit limit as it can have detrimental impacts, as well.
Be Strategic About Applying for New Credit
New credit on your credit history can temporarily lower your credit score until the activity on the new credit can be analyzed. If you're planning to make a big purchase, like applying for a home loan, it's advised to avoid applying for new credit cards or loans. This kind of activity can stall the home loan application process if you have already been pre-approved or are in negotiations for buying a new home.
Your credit score has a big impact on the interest rate you pay when applying for a home loan at Lake of the Ozarks. If you're curious as to how much of a home you can get approved for, give us a call at (573) 746-7211 or visit our website at www.yourlakeloan.com. We look forward to speaking with you about your home loan needs!
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