Credit Tips for Lower Interest Rates

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A good credit score typically translates into a lower home loan interest rate.

The higher your credit score, the more likely you will pay your debts in a timely manner.  The lower your credit score, the less likely you will make payments on time.  For those with lower credit scores, lenders may adjust home loan interest rates to accommodate for the additional credit risk on issued loans.

If you wish to improve your credit score, there are many ways to do so!  Here are just a few.

Focus on recent derogatory credit. Concern yourself most with past due balances, charge offs and collections that have occurred in the last two years.  Items more than two years old have less impact on your current credit score.  In fact, if you pay off delinquent items over two years old, you may actually lower you credit score.  

Keep existing credit card accounts open.  Your established credit history matters.  If you have old credit cards that you don’t use often, you still have the benefit of the history they represent.

Try to distribute debt evenly across your credit cards.  If you can’t pay off all your debt at once, try to keep balances as close to zero as possible, aiming for under 30% of the available credit limit.  Also, if your credit provider increases your credit line, the ratio of debt to available credit is automatically reduced.

Remove errors on credit reports.  Check your credit reports for any errors and delinquent information.  Follow the dispute process to challenge any inaccurate information – credit reporting agencies must respond to you in 30 days.

If you are anyone you know has questions regarding available home loan options, please get in touch.  I’m happy to help!

501.229.7145 | egornatti@primeres.com

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