Getting a home mortgage is one of the biggest financial milestones for most people. When you are trying to get a mortgage, the first thing that you will need is a mortgage pre-approval. When you try to get a pre-approval, a loan officer will examine your financial history. The loan officer will look at your credit score, income, assets, and loan history. After reviewing that information, a loan officer will calculate things such as your monthly payment, interest rate, payback period and the size of the loan you qualify for. Like any other type of loan, the most important factor when getting a mortgage pre-approval is your credit score.
Tips on Getting Your Credit Score Ready for a Mortgage Pre-Approval
The most important thing to realize when preparing your credit score for a mortgage pre-approval is the fact that it is a long process. Your credit score reflects the history of your financial transactions, and it is updated every 45 days. Your payment and transaction history from the last two years can effect your credit score, so it is important to start preparing early. When you decide that you want to get a mortgage, it is best to start preparing your credit score at least one year in advance. Below are a few tips to keep in mind when working to get your credit score ready for a mortgage pre-approval.
- Pay Your Bills On Time
The most important factor in determining your credit score is your bill payment history. It carries a 35% weight when calculating your credit score. Your bill payment history from the last year is used to calculate your credit score. This is why it is always a good practice to pay your bills on time. Paying on time will save you from late payment fees and it will improve your credit score.
- Change Your Credit Utilization Habits
Your credit utilization habits account for 30% of your credit score. We recommend that you aim to keep your credit utilization under 30%. You should try to not use more than 30% of your credit limit, and you need to pay the credit card bill on time. If you have any other types of loans, you need to try and pay those on time as well.
If you need some more tips on how to improve your credit score, check out this article.
In Conclusion..
Unfortunately, you cannot improve your credit score overnight. We can help you improve your credit score and reach all of your financial goals. Schedule a consultation with us and we will come up with a personalized credit repair plan for you.
