How To Boost Your Credit Score

By Kaci Cooper, 23 Jan 18:45

A qualified mortgage consultant can help you boost your credit scores.

Consumers interested in buying a home will pay interest based on the current market conditions and their ability to pay back the loan. The borrower’s income and debt ratios are also taken into account by the lender. This is why it is important to have a mortgage professional who has a keen eye for seeking out problems to give you the best interest rate possible.

Interest rates are broken down into schedules based on credit ratings. A borrower with outstanding credit will receive an A-paper loan, which will allow them to have a lower interest rate as a reward for a track record of paying their bills on time. Sub-prime loans can range anywhere from A-minus to D-paper loans. Therefore it is important to put in the work to get your credit back because bringing your credit from D-paper to B-paper can save thousands of dollars over time.

A qualified mortgage consultant will guide you through the nuances of the process of improving your credit score to refinance and save money. First and foremost, he or she will want to review the terms of the existing mortgage loan to determine if you have a pre-payment penalty clause written into your contract. In general terms, that means that if you sell the home or try to refinance before the pre-payment penalty expires and you have not already paid off 20 percent of the original loan amount, you will most likely have to pay a 3 percent fee back to the lender to compensate for the high risk and high costs incurred to provide that financing.

You should obtain your credit score and then try to improve your score within the next six months before the next expiration date.

There are five factors that make up the credit score and your mortgage consultant can coach you through some basic strategies to improve your credit score. This means very limited use of credit cards, paying off debt as much as possible, and not getting any additional credit cards unless you will benefit from such action. You will want to verify that negative items you have paid off are being removed from your credit report, and that good credit history is being reported to all three bureaus. You’ll also want to dispute any errors that appear on your credit reports and have those removed.

Then it will be time to refinance at a better rate. Have your mortgage officer help you continue to refinance until you reach A-paper status. This is a strategy that also works well for first time home buyers who do not have enough credit history under their belt to get an A-paper loan at the time of purchase. The important thing is to work with a consultant who can help you achieve personal wealth.

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