What You Need to Know: Improving Your Credit Score

We have seen a relatively large hike in mortgage interest rates since the election. Regardless, home financing remains a bargain by historical standards.

Though we have written about how to establish and maintain excellent credit in the past, it bears repeating in an upmarket. In order to secure the lowest possible rates when purchasing or refinancing your home, you must have “great credit,” Below are steps to take to reflect it.

• Limit yourself to two or three credit cards and ensure they have high limits and low balances. The highest credit scores I see are those who have a couple of very old credit cards with high limits ($5,000 or greater) and no balance.
• Pay off any high balance/high interest rate credit cards first. Once your balances drop below 50% of your credit limit, you will begin to see improvement in your credit score.
• Pick three or four items each month to charge on a credit card and pay them off in full each month. This shows responsible use of credit. Again those with the highest scores I see put most of their bills on one credit card and pay the balance in full at the end of each month.

  Do not sign up for any service that offers to negotiate your credit card debts away or pay them on your behalf. This is usually a scam that ends with the closing of all of your credit lines and leaving you with no credit.

• Do not open or close any credit trade-lines or pay any collections without consulting a licensed mortgage professional with experience in repairing and maintaining excellent credit.
• Timing is everything. In many cases taking on new credit initially lowers your credit score, and closing a credit card account or paying an old medical collection can drop your score as much as 100 points.

As we approach the beginning of a New Year, it’s time to review your credit report, correct any mistakes, and give your credit a boost.

The David M. Damaré Team is here to answer your questions about financing options and mortgages.

“Mortgage Lending is Our Business: Customer Service is Our Passion.”

Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you.

David.

919.851.0999

Raleigh Mortgage Man, NC Mortgage Man, Triangle Mortgage Man, Triangle Mortgage Expert all owned and licensed by David M. Damaré. All rights reserved.