Your credit rating is the most important factor in the mortgage rate you will receive. The lower your score is the higher your rate will be. Before you put in an offer on a home you need to ensure your credit score is being maximized. There are a few things you can do now that will increase your credit score in as little as 30-45 days. Pay down credit card balances – The amount of available credit you are using on your credit cards is called your credit utilization ratio and makes up 30% of your overall credit score. Only your payment history (35%) has a bigger impact on your score. Try to pay down your credit card balances below 15% of their limit. Don’t apply for new credit – Credit inquiries and new accounts each make up 10% of your score. You should wait on getting a new credit card or a new car until after you have closed on your home. Contact creditors about collections and late payments – If you have any collection accounts on your report you can contact the collection agency and see if they will remove the delinquent account if you pay it off. This is known as a pay for delete. You can also call creditors to see if they will remove late payments as an act of goodwill. Sometimes it works.
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