Polish your credit score
Your credit score carries plenty of weight in your mortgage application. If subpar credit can knock you out of the running for some loans, a high score can help roll out the red carpet for the best mortgage terms.
Here’s how to spiff up your score as much as possible before submitting your loan application:
- See where you stand. Order your credit score online or check to see if it’s printed on your monthly credit card bill. A score of 700 is “good,” while 750 or above generally lands you the most competitive rates.
- Review your credit history reports. Getting a copy of your credit report is easy and free through several websites. The summary document spells out the factors that are damaging to your credit score, but read the details that follow, too — that's where you can find problems resulting from identity theft.
- Dispute errors and fraud. Under the Fair Credit Reporting Act, credit bureaus are required to correct inaccuracies. And eliminating mistakes from your report can boost your score.
- Make changes where you can. Some factors that play a role in your credit score — say, the length of credit history — can’t quickly be changed. But others can, so focus on things you can fix in the short term.
- Take another look at your debt. Reduce revolving credit and avoid payday loans. Doing so will reduce your debt-to-income ratio and free up cash to use in saving for your down payment.
- Keep that score up. Stay on your best financial behavior. Pay your bills on time, avoid applying for additional credit and don’t close any open lines of credit. Keep your credit utilization ratio low by charging less on your plastic and paying down balances.