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Don’t let a low credit score keep you from your dreams of homeownership! Whether you’ve just started building your credit or need to make some repairs to get back on track, understanding the factors that impact your score will help you identify ways to improve it. Read on for tips from Joshua Ward at KFS Mortgage Company in Waterville.
Make your payments on time. Paying your debts on time is the most important factor in your credit score, so it’s imperative that you make your payments promptly.
Pay down your credit card debt. Your credit utilization ratio is another factor that plays a role in your score. It is calculated by dividing the total amount you owe on revolving accounts, like credit cards, by the total of all your revolving credit limits. Using more than 30% of your available credit may lower your credit score. If your credit cards are maxed out, you may need to focus on paying them down.
Avoid adding debt while you are trying to improve your score. Opening new credit cards or other loans can impact your credit score. Your score will go back up again if you make all your payments on time and refrain from applying for new debt, but this can take several months. Also, did you know that your credit is checked each time you apply for a new loan or credit card, even if you don’t open the account? While it’s only a minor hit each time, they can add up.
Finally, be patient. Like most things in life, increasing your credit score doesn’t happen instantly. The key is to practice good credit habits consistently.
Generally, the lower the credit score, the higher the mortgage rate and fees you may pay, so you’ll benefit from increasing your score. The type of credit score used by lenders can vary, but one of the most frequently used scores is the FICO score. You can learn more about how your FICO score is determined online at https://www.myfico.com.
KFS Mortgage Co. is here to help with every stage of the mortgage process, so feel free to contact us at 207-873-5153 with any questions about building your credit score. KFS Mortgage Co., NMLS 2097505, is an Equal Housing Lender.
