There’s no more important time to work on your credit score than when you’re about to apply for a mortgage. Improving your credit can save you a ton of money—we’re talking about thousands of dollars over the life of the loan. Here are the actions you can take that will have a notable impact on your score.

Pay down your credit card balances
Credit utilization is one of the biggest factors in determining your credit score. Your credit utilization should at least be less than 30 percent of your limit, and it’s even better if you can get it below 15 percent. This rule applies to both individual cards and your overall credit limit.

It may even be worthwhile to use some of the cash funds you were planning to use for a down payment to pay off credit card balances. You can chat with a lender to find out if it would be beneficial for your specific situation.

Do no harm
While you certainly want to improve your score if possible, at the very least you’ll want to keep it steady. Avoid opening new lines of credit if you’re applying for a mortgage in the very near future. This will cause a hard inquiry to show up on your credit report.

Continue this while under contract, buying a houseful of furniture before you close can cause you to no longer qualify for your loan!

Take care of negative items
It’s good practice to check your credit report for negative items a few times a year—you can get one free report from each of the three major bureaus (Experian, Equifax, and TransUnion) per year.

If you find any negative items (collections, late payments, etc.), write a letter to or call the original creditor. Explain the circumstances that led to the negative item, and request that it be removed from your report. It can be surprisingly effective, and removing a negative item will improve your credit score in a hurry.

I had a 30 and 60 day late on my credit from B of A that were on accounts that hadn’t even been open for years. It was super easy to get them taken off and my credit score benefited greatly! The higher your credit score the lower your interest rate!

Talk to a Lender                                                                                                                                   Even if you’re not ready to buy yet, a lender can pull your credit for free and help you to create a plan to be in the best shape possible to buy a house. They can let you know items that will need to be paid off or paid down, how to increase your credit score, and help you to determine a good price point you’ll later be looking for which will help you to save up enough for a down payment! It never hurts to plan ahead. Especially for one of the biggest purchases of your life!

Rachell Pintor | Licensed Realtor with Twins & Co. Realty | Mobile: (602) 574-3438 | Email:  Rachell@TwinsandCompany.com