If you’re shopping for the lowest refinance mortgage rates from companies like Amerisave and are finding that the quotes you’re getting are higher than what lenders are advertising, the likely culprit is your credit score. Did you know that 33% of Americans today have a credit score less than 620? Here are several tips to tune up your credit score and help you get today’s best refinance mortgage rates for your next home loan.
How to Improve Your Credit Before Mortgage Refinancing
1. Manage Your Credit Wisely
Maxing out your credit cards can drop your credit score by as much as 35 points. Before refinancing your home pay down the balances on your cards as much as possible and avoid opening new accounts for at least 90 days before applying for a mortgage loan.
2. Monitor Your Credit Reports
Start reviewing your credit reports at least six months before applying for mortgage refinancing. Errors take time to correct and can have a dramatic impact on your credit score. You can get free credit reports from all three credit bureaus (TransUnion, Experian and Equifax) by visiting the website AnnualCreditReport.com. If you only access one report at a time, you can get one every four months and monitor your reports throughout the year.
3. Pay Your Bills On Time
Your bill payment history accounts for 35 percent of your credit score and takes longer to improve your score after making late payments than any other part of your credit history. Avoid paying anything late for at least six months before applying for home loan refinancing.
4. Pay Down Your Debts Below 10% of Available Credit
Your score considers both credit limits and account balances. The ideal ratio of debt to credit is to only carry a balance of 10% of your available credit, this will ensure that your debt ratio is not negatively impacting your credit score.
5. Avoid Closing Your Credit Accounts
The duration of your credit history makes up another important chunk of your credit score and closing old accounts could be damaging. Mortgage lenders want a history that indicates responsible behavior over time. Maintaining accounts with small charges every so often while immediately paying off the balance could significantly improve your FICO score. Having access to a large amount of credit will not hurt you; lenders look at how you manage your personal finances over time.
You can get more tips for improving your credit score and getting today’s lowest refinance rates without paying lender junk fees by checking out my free Underground Mortgage Videos.