Why Credit Scores Matter
As we're all seeing now, mortgage interest rates have surged from just over 3% to north of 5% on a Conventional 30-year fixed loan. One thing potential homebuyer sometimes overlook is their credit score, which has a big impact on the interest rate you'll get on a mortgage. The higher the score, the better the rate. Credit scores north of 740 are considered excellent, but under that, lenders start to add in more costs to reflect additional lending risk, which has an impact on the overall mortgage payment. With rates expecting to continue to climb, getting your credit scores in line will allow you to take advantage of the best rates available. Here's some things to consider.
CHECK YOUR CREDIT REPORT, grab your free credit report by using annualcreditreport.com. Look at it to see if there's anything that's not right and then get those things removed.
LOWER YOUR CREDIT UTILIZATION RATE, pay down high balance credit cards, keep them below 40% of their limits.
PAY BILLS ON TIME, late or missed payments can knock down your credit scores. Set up auto payments so you won't have that problem.
WATCH THOSE CREDIT INQUIRIES, if you're trying to buy a home, don't go take out any new credit, hold off on big-ticket items, like cars, which really drive down credit scores.
It's always a good idea to monitor your credit scores as they matter and have a huge impact on the interest rate for mortgages and consumer loans.
Robert Groves, Senior Mortgage Broker
5635 N.E. Elam Young Parkway, Suite 308
Hillsboro, OR 97124