How Your Credit Score Can Affect Your Mortgage Rate

Are you thinking about buying a condo, house or multi-unit investment property? If so, your credit score can vastly affect your interest rate, and, ultimately, the amount of interest you pay during the life of your loan. For example the best rates are usually offered to those with a credit score of 740 or higher. Rates will still be favorable for those borrowers with a score of 700. However, a score of 698 could actually cost you thousands of dollars in added interest.

Here are some reasons your credit score may not be as high as you would like it to be:

1. Don’t apply for too many credit cards/loans in a short period of time. Inquiries can negatively impact your score.

2. Multiple late payments on credit cards are bad and will affect your credit for years.

3. A delinquent account, bankruptcy or foreclosure can hurt you for at least 7-10 years.

4. If most of your debt is on credit cards, pay these off and your score can dramatically rise.

5. Aim for a diversity of credit mix instead of just credit cards. Loans, mortgages, etc. add points to the mix.

6. Keep your credit utilization under the 30% level.

7. Longer credit history will give you higher credit scores.

8. Review your credit score regularly and address any inaccuracies immediately.

9. Get a new credit card, auto loan, mortgage, etc. if you need it, you are responsible. More credit will increase your credit score.

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