When you apply for a mortgage, your lender will want to know they can trust you with their money. In other words, they’ll want to see you have a glowing track record for paying back what you borrow, and nothing illustrates this better than your credit score. The higher the score, the better rates and lower fees you’ll qualify for from a mortgage lender. Here are a few tips for raising your score before applying for a home loan.

3 Ways to Improve Your Credit Score Before Getting a Mortgage

1. Don’t Miss Any Payments

Even if you are financially capable of paying the minimum on time, life can easily get in the way of the payment schedule. Unfortunately, even missing a single credit card payment could lower the score. To stay on top of payments and avoid collection letters, make a note on a calendar, and set reminders in your phone and computer. Alternatively, set up automatic payments, so the minimum fees are pulled from your bank account without any effort.

2. Pay Off Some Debt

You may have heard of the cardinal rule of credit usage—however much you are allowed to spend, you should never spend more than 30% of it. If you have a hard time staying within these lines. Simply put all cards away when you reach the 25% limit. To increase your score before applying for a mortgage, pay down all credit cards and loans to under at least 50%, if not more.

3. Don’t Open New Credit Lines

Some people believe that if they open additional lines of credit, they can increase their total credit limit, bringing down their total percentage of credit utilization. While this may be true, opening a new line of credit can temporarily bring down the credit score. Therefore, stay away from applying for that new card right before applying for a home loan.

 

If you’re looking for a mortgage loan for your dream house, don’t go to the bank. By heading to Spirit of America Federal Credit Union in Lincoln, NE, you’ll work with a member-owned company that’s committed to helping clients reach their goals by offering loans for affordable rates. This nonprofit business provides lower fees and higher savings rates than conventional banks, so you can ensure your financial future is in caring hands. To learn more about their mortgage loan application process, call (402) 467-1102 today. You can also visit their website to browse their other services, including student and auto loans.