Cleaning up your credit is an important part of qualifying for the best mortgage loan. If you are in the process of refinancing your mortgage and have not tuned-up your credit first, you are making a big mistake. Here is what you need to know to fine tune your credit rating.
» Mortgage Lender Spotlight «
that can save you thousands of dollars on your next home loan.
Before you do anything else you need to make sure your credit records are accurate. Request copies of your credit reports from the three credit agencies; once you have these records go over them with a fine tooth comb for errors. If you find errors you will need to dispute the errors with the individual credit agency and the creditor responsible for placing it there.
Once you are certain that your credit records are correct, you need to concentrate on your repayment history. A large portion of your credit score is derived from your repayment history; late payments have a negative impact on this score. You need to have at least six months of on time payments on your credit record before you start shopping for a new mortgage.
The next step in polishing your credit score is to pay down the balances on your credit cards and close accounts you do not need. The lower your debt-to-income ratio, the higher your credit score will be. Do not make major purchases before applying for a mortgage; any credit inquires and financed purchases will damage your credit score prior to refinancing your mortgage.
When you are ready to begin shopping for your new mortgage, protect your credit score. Do not allow lenders to run your credit until you have selected the mortgage offer you want. You will need to request “no obligation quotes” from prospective mortgage lenders. This will require you to provide the lender with an assessment of your overall credit picture to receive the quote. Do not inflate your income or credit standing when shopping for quotes. If you do this the lender could change or retract the offer when they see what your credit actually looks like.
Doing your homework before applying for a new mortgage will help you avoid mistakes that can cost you thousands of dollars. For Chicago Mortgage Refinancing register for our free mortgage guidebook.