The types of mortgage loans that you can receive are in part determined by your credit score. There are three major credit bureaus that keep track of your history of credit and issue three different credit scores. Your mortgage loan officer will use the middle of these three scores.
So how good does your credit score need to be? According to major credit bureau Experian, the current national average credit score is 736. The average credit score here in Knoxville, Tennessee is 743. If your credit score is within a few points of these averages, you will be able to qualify with certain lenders that are unavailable to lower scores.
If you don’t fall near the higher end of the spectrum, however, there are many things you can do to improve your credit score and your chances of securing a lower mortgage rate:
Review Your Credit Scores Early
Legislation passed in 2005 entitles you to one free copy annually of your score from each of the three major credit bureaus: Experian, Equifax, and Transunion. Click here to get your free scores after answering some a few security questions. A copy of your credit score can be obtained here for a fee. Obtain and review these scores several months before even applying for a mortgage loan. If you catch any errors or discrepancies in the reports, clear them up with the credit bureaus. It can sometimes take months before any changes you make affect your credit score.
Work on Raising Your Score
You can work on raising your credit score by paying off credit card debt that is close to your credit limit. Lenders like to see that you have lots of credit available to you but that you don’t use the full pool of credit available. You should also focus on paying off debts with the highest interest rates and outstanding debt that you can easily pay off.
There are many other factors that can be improved to better your chances of getting a low mortgage rate, but your credit score is a big part of the process.
Keystone Mortgage provides Tennesseans with the best mortgage experience, period. So what are you waiting for? Apply here now.
Call us today at 865-909-0211. We can give you more details on ways to improve your credit score.