This week mortgage rates in the United States already fell to their lowest level since Septemberprovide some relief for borrowers facing higher-than-expected repayments recently.
With interest rates expected to remain lower than the peak of 2022, this could be a good time for buyers to buy. But to get a good deal on a mortgage deal it’s important that your credit score shows you’re responsible for your money.
Credit scores are calculated from 0 to 999, plus high scores mean you are considered a trustworthy person. The more points you get, the better chance you have of being accepted for a mortgage at an attractive rate.
Credit bureaus Experian There are five classifications of credit scores:
Very good: 740 – 799
Good: 670 – 739
Appropriate: 580 – 669
Poor: 579 and below
If you place yourself in the top tier of credit scores then you stand a good chance of getting great deals on your mortgage and lower than average interest rates. However, going down the rankings you will find that there is a greater chance that you will be rejected for a mortgage, or only accepted if you agree to pay high interest rates. .
How to improve your credit score
Considering how much of an impact they can have on your financial prospects, the calculations behind credit scores can be confusing. There is no list of actions to ensure that you get a high score, but there is one few basic principles keep in mind that this will show prospective lenders that you will be able to meet your financial obligations.
Review credit reports – Before you start working on improving your credit score, check if you have any outstanding debts to pay. Request a credit report from one of the major national reporting agencies to see if you have any old balances that are affecting your score.
Always pay – Whether you are an athlete or financing a car, showing that you can manage your finances is important. Avoid late payments and banks will be more confident to lend to you.
Limit your credit utilization rate – Sometimes called treasures debt ratio, which is the sum of all your balances divided by the sum of your credit limits. It actually measures how much of your borrowing capacity is already used. Ideally, you want this number to be no higher than 30%.
Keep old stories – It may sound silly but opening old accounts, after paying off debts, is a great way to increase your credit score. Credit agencies often check the length of your credit history when calculating a credit score.