Your credit, your credit scores, and how wisely you shop for a loan that best fits your needs have a significant impact on your mortgage interest rate and the fees you pay. To improve your credit and your chances of getting a better mortgage, get current on your payments and stay current. A large portion of your credit scores are based on whether or not you pay your bills on time. Much of your credit scores are based on how much debt you owe, too. That's why you may want to consider paying down some of your debts.
Be careful making any big purchases on credit before you close on your home. Even financing a new refrigerator or a new car could make it harder for you to get a mortgage in some cases.
An average consumer who adopts healthy credit habits, such as paying bills on time and paying down credit cards, could see a credit score improvement in three months or more.
Correcting errors on your credit report may raise your score in just 30 days. It’s a good idea to correct errors before you apply for a mortgage NOW rather than later. Get your credit report at annualcreditreport.com to check it for errors. If you find mistakes, submit a request to each of the credit bureaus asking them to fix the mistake. For more information about correcting errors on your credit report, visit consumerfinance.gov/askcfpb.
Check out interest rates and make sure you’re getting the credit you’ve earned.
For more on home loans and credit, visit consumerfinance.gov/owning-a-home.