Your credit rating is one of the most important pieces of information lenders use when deciding whether to extend an offer, and it also influences how much interest you’ll pay. This is especially important if you’re applying for a mortgage, as lowering your interest by half a percentage point could save thousands of dollars over the life of the loan. Understanding how the reporting agencies calculate these scores can help you boost your rating before applying.

What Affects Credit Scores? 

1. Payment History

Before issuing credit, lenders want to be sure they’ll get their money back. A history of on-time payments is the single most important factor influencing your credit score, so be especially diligent about paying your bills before applying for a mortgage.

2. Available Credit

Lenders consider maxed-out credit cards as indications that a borrower has trouble managing their finances, so they may hesitate to approve a loan. Paying down the balance on your credit cards is a fantastic way to improve your credit, and may save hundreds of dollars in interest every year.

3. Debt-to-Income Ratio

How much total debt you carry in proportion to your monthly income is another important factor, especially if you’re applying for a mortgage loan. Too much debt in relation to your income means you may not be financially stable, and don’t have the resources available to handle an emergency. Fortunately, you can improve your ratio by taking a second job and paying down credit cards and other liabilities.

Buying a home is a major investment in your future. For over 20 years, Dan Main has been helping aspiring homeowners throughout Missouri’s St. Charles and St. Louis counties find the best financing options and navigate the complex process of applying for a mortgage. Visit their website and follow their Twitter to learn more about their mortgage programs, or call (636) 284-4144 to start your journey toward home ownership today.

Dan Main: NMLS # 502036

Flat Branch Mortgage Inc: 224149

947 Waterbury Falls Dr., O'Fallon, MO 63368

(636) 284-4144

This is for informational purposes only and not an offer to lend or extend credit.