Improving Your Credit Score Before a Home Loan Application

The interest rate offered and terms of your home loan will depend on your credit score. If your score is low and you are considering applying for a mortgage, this article has some tips which can help.

The last article which was focused on preparing to meet your mortgage lender started with information about ensuring your credit score was accurate. This is because your credit score is the most determining factor when it comes to a home loan approval. However, your credit score can also determine the interest rate you pay along with the terms and options of your home loan.

How to Improve Your Credit Score and Home Loan Options

Patriot Title Agency knows just how important it is for all buyers to get the best deal on a home loan and has prepared the following article on how you can improve your credit score before meeting with a lender.

Using Credit

It can seem like a strange paradox, but many people who have no outstanding debt, credit cards, and pay their bills on time using their monthly salary won’t always have a good credit score. Why? Because they don’t actually use credit, so reporting agencies have little information about their repayment history to use when calculating their score. If this sounds like you, consider getting a very small credit card which you use only for your monthly bills. As soon as you use your credit card to pay a bill, immediately transfer the money from your regular account to your credit card account, before the statement is issued. This can help to improve your credit score as it shows that you are able to manage a line of credit and also demonstrates on-time payment of your account.

Consolidation

If you have multiple outstanding debts across a range of lenders and are simply paying the minimum monthly amounts, then not only are you not improving your financial situation but you aren’t helping your credit score. Instead of maintaining a range of store and credit cards at their maximum limits, consider a rolling these all up into one debt consolidation loan. The benefits of a loan such as this can include:

• Limited financial liabilities.
• Structured payments mean that you are improving your credit situation with every payment.
• If you are paying less interest then you can reduce your debt slightly faster.
• The structure of a loan shows an end-date, as opposed to revolving credit.

Both reducing your liabilities and reducing your outstanding debt can have a positive effect on your credit score. When you are ready to apply and make an offer on a home, remember to include title insurance in your budget. Available only prior to settlement, title insurance is the best way to protect your title ownership. To find out more, speak with Patriot Title Agency by calling 1-866-475-3005

Direct Debits Can Work Wonders

Each time that you pay a bill late, it is recorded against your credit file and negatively affects your credit score. The more late payments you accrue, the lower your score. The challenge faced by most isn’t that they don’t have the money to pay their accounts, it’s simply that they often forget they are due. Direct debits can be a great option for people in this situation who have the money in their accounts and simply just forget to pay their bills. Direct debits ensure that your bills are all paid on time, slowly, but eventually, working towards improving your credit score.

No More Debt

Each time you visit a store it’s likely that they will offer you a new store card, with an associated promotion which includes a large number of loyalty points. As attractive at these offers are, adding more credit to your file isn’t going to help your credit score. If you do come across one of these offers and you can see that it will have real-world benefits, be sure that opening a new line of credit occurs in conjunction with closing an old one. For example, if you have a card which you don’t use, consider closing this as soon as your new card arrives.

When the Time Comes, Title Insurance in Canton, OH Is a Must

Once you have improved your credit score and are ready to start applying for a home loan, it’s important that you complete your due diligence. While there are many nice-to-haves throughout the home buying process, title insurance is definitely a must-have. Available only prior to settlement, title insurance provides financial protection against claims made towards the ownership of your new home and it's title. To learn more about the benefits of title insurance in Canton, OH, speak with an expert at Patriot Title Agency today by calling 1-866-475-3005.