70 Ways For Home Buyers To Save Money When Buying A Home: Tip #5
Improve your credit
The higher your credit score, the lower your interest rate and the less you need to put as a down payment.
Your credit is the most important criteria when determining your rate. You can save yourself thousands of dollars in interest if you can raise your score a few points. The difference in interest over 30 years between a loan at 5% and a loan at 6% is over $50,000!
Having the best credit you can have is essential when getting a mortgage.
Lately, the mortgage industry has turned to what are called credit scores. Your credit score is a number that tells the lender how risky you are as a borrower. The higher your credit score the lower your rate. If you have a credit score above 700 you can be assured you will get the best rates around. If you score is below 620 you might have to get a sub-prime loan which will cost you more. If your score is in the 600's it really depends on the lender, so use a good mortgage broker that can shop your loan to several lenders.
You can easily improve your credit score. Here are some suggestions:
1. Do not apply for credit before you get your credit checked for your mortgage. Every time you check your credit, your score will go down.
2. Pay down your balances
as much as possible. The more room you have on your credit
cards and loans, the higher your score.
3. Check your credit yourself, and get any erroneous derogatory information removed. You can get a free copy of your credit report by going to annualcreditreport.com. Do not go to freecreditreport.com- they are nothing more then a scam.
To learn more about how to get your credit scores and improve them fast, visit CreditSparkle.com to get all the information. This site even has a short course on credit repair if you already know you have bad credit.
One more thing to keep in mind, many people think their credit is worse then it really is. Let your mortgage broker tell you how bad or good it is. You might be pleasantly surprised.
On the other hand, if you have not checked your credit report in a while, you might be in for a nasty shock. It is estimated that 80% of all reports contain inaccurate information. And most of the other 20% of reports that contain no errors have no credit either. So, if you actually have credit, your chances of having one or more errors on your report are much greater than 80%.
That is another reason
to work with a mortgage broker who knows about credit. The
right broker can help you get your credit fixed and then
submit your loan to the lenders and thus save you a ton
of money. If you went to the banks first, there is very
little chance they would help you fix your credit.