These 3 Tips Keep Your Credit Score Healthy When Buying or Refinancing In 2021
A high credit score is vital to getting a great rate on your upcoming home loan or refinance. A healthy score can have a significant impact on both qualifying for certain loans and the size of your monthly payment.
Here’s three ways to bolster your credit score to get you prepared for that home loan or refinance…
- Keep Old Credit Card Accounts Open
A significant aspect of your credit score is credit history. In order to enhance that part of your track record, keep old credit card accounts open.
It’s human nature to close out an account once you’ve paid it off, but your credit score is interested in how long your credit lines have been open. So, you don’t have to use the account anymore if you have other credit cards for your regular purchases, but refraining from closing out that old account can result in a better monthly payment on your new home loan.
- Wait On Other Loans or Debt Until After Your Home Loan or Home Loan Refinance
If your main goal is acquiring the best home loan or refinance possible, avoid new loans and debts until after you’ve secured your loan.
Why? New loans often require a hard credit check or inquiry. And new debts mean a higher credit utilisation rate. Both of the above hurt your credit score and/or make you look riskier to the lender.
So, if you know you’re going to be refinancing your home or securing a new home loan in the near future, wait to open a new credit account or to get other loans.
- Decrease Your Credit Utilisation Rate
Like we mentioned before, a high credit utilisation rate can be harmful to your chances of securing the best possible rates on your home loan or home refinance. In essence, the more credit you’re using, the lower your credit score.
To lower your utilisation rate, you should:
- Pay down balances as much as possible. This has the added benefit of decreasing the amount of interest you’ll pay on those debts.
- Ask for a credit line increase. By securing a credit line increase, either by clicking a few buttons or calling your credit card company, you’ll need to use a lesser percentage of that credit and therefore decrease your utilisation rate.
Of course, don’t forget to do the simple things, like set up auto payments on your bills.
Use these tips to boost your credit score and get the best possible home loan or refinance deal.
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