- Check all three credit reports and scores – Banks will check the reports from Trans Union, Experian and Equifax, and scores can vary as much as 50 points! Review all three reports and look for errors prior to applying for a mortgage.
- Don’t close charge accounts or ask for lower limits – Banks want to see that you have credit available to you. If you carry a balance on any charge account your debt to credit ratio should be less than 30%.
- Don’t make big purchases before you lock in your rate – It’s not uncommon for people to find their dream home and then immediately go out and buy all new furniture or appliances. Wait until after you have locked in your mortgage rate before you do this, especially if these items will be bought through in-store financing or put on a credit card.
- Too much mortgage shopping dings your credit – It’s smart to shop for a mortgage to get the most favorable rates, but don’t drag it out over for than 30 days. Anytime a lender checks your credit after the 30 day timeframe you’ll lose five points off your credit score.
- Don’t pay off one credit card with another – While this may be a simple case of wanting to transfer your balance to a credit card with a lower rate, this will lower your score because it opens a new line of credit.
Corcoran says that there are three things consumers need to remember to keep their credit score as high as possible:
- Always pay your bills on time
- Keep your balances below 30% of the total credit available
- Don’t be shy to ask a creditor to remove a late payment from your report, especially if you have established a long history of on-time payments
Do you agree with these tips? Do you have any other advice for people currently shopping for a mortgage?
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