Credit Score and Mortgage Pre-approval
Your credit score is a summary of how effectively you have been able to pay past debts. Utility bills, rent, credit cards, and student loans can all affect your credit score. Those three digits can have a major impact on whether you are pre-approved for a loan or not. If you are turned down because of credit score or are given a high rate due to a lower score, stay optimistic. There are things you can do to improve your credit score. Here are some steps you can take:
1. Check for errors on your credit report
25% of Americans discover errors on their credit report. Mistakes are fairly common due to creditors making mistakes in the reporting process. Unfortunately when mix-ups happen, your credit score can take a hit and it’s your job to catch it. Once these mistakes are caught and corrected it can take anywhere from one to three months for your credit report to reflect the improved score.
2. Pay down credit debts
Paying off debts can have a very positive effect on your credit score and the effect could show as soon as one month after paying off a debt! The amount you can borrow in credit compared to the debt that you owe makes up 30% of your credit score. The more available credit you have, the better!
3. Stay on top of your bills
Paying all of your bills on time helps boost your credit! You probably already know that. If you are behind, adjust your budget so that you can catch up. Once you go from being late here and there to paying bills on time every time, your credit score can show the improvement in just a month or two. If you are less than 30 days late on a bill, pay it asap! Creditors usually hold of reporting to credit bureau until after 30 days past due. If you have trouble remembering to pay bills, consider online banking or a bill pay app. Check out what Bridge offers for scheduling online payments by clicking here!
4. Open a new credit card
Whenever you open a new card, as long as you aren’t putting a large balance on it right away, you are essentially increasing your credit line. Opening a new type of credit card can also give you more of a “credit mix”. Credit bureaus like to see that you can manage different types of credit. Opening a new card has the potential of positively impacting your credit score as early as one to six weeks. Bridge offers great credit card options. Learn more by clicking here.
These are just a few steps you can take to improve your credit. Although it may seem frustrating, a poor credit score is only temporary if you work hard to make improvements.
Did you recently improve your credit score and are ready to buy? Apply for a mortgage loan with Bridge.
Still have questions? Give us a call at 800.434.7300. Our mortgage lenders are happy to help you.
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