Before applying to refinance your home mortgage loan it is important to take stock of your credit reports and check for any inaccuracies. Your credit score is derived from your credit reports and any inaccurate or negative information will have a significant impact on your FICO score and the mortgage rate you will qualify. Here are several tips to help improve your credit score prior to mortgage refinancing.
Improving your credit score is a long term endeavor; there are no quick fixes for financial problems. There are however a number of habits you can develop which will improve your FICO score and get you a lower mortgage rate.
Make All of Your Payments on Time
Your credit score is complex calculation made up of a number of factors; however, 35% of this score is based on your payment history. Paying all of your bills on time is the best thing you can do to improve your credit score.
Pay Down Your Credit Cards
Paying down the balances on your credit cards will also help improve your credit score prior to mortgage refinancing. The amount you owe accounts for 30% of your credit score. Avoid maxing out your credit cards, making large purchases, or opening new lines of credit prior to refinancing your mortgage.
You can learn more about improving your credit score before applying for a new mortgage, including costly mistakes to avoid with our free mortgage tutorial.