Bumping Up Your Credit Score to Reduce Your Monthly Payment

By Michele Lerner
Mortgage Credit Problems Columnist

If you are ready to buy a home and are comparing mortgages to see which lender has the best rates, you might be better off evaluating your own credit report, especially if you have debt problems. Fill out the application on this page to see if you qualify for a bad credit home mortgage loan.

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CNNMoney.com says that mortgage lenders now reserve their best rates for customers with a credit score of 760 or higher. Borrowers need a minimum credit score of 620 for a conventional home loan approval, but those with credit problems may qualify for a loan from bad credit lenders. Consumers will find when they apply for a home loan or a mortgage refinance that lenders now base the interest rate on a tiered system which typically shifts every 20 to 30 points. Borrowers with a credit score of 710 will qualify for a loan, but they will pay .125 - .250 percent higher interest than borrowers with a score above 760. The monthly payments will be slightly higher, and so will the overall interest you pay.

Credit Repair Tips

  1. Never miss a payment or pay late. Creditors report a late payment as soon as you are 30 days past due.
  2. Check your credit report. Request a free annual credit report at annualcreditreport.com. Request corrections in writing for delinquencies that are incorrect, loan amounts that are too large or credit limits that are too low.
  3. Pay down your credit cards. Paying off several thousand dollars in credit card debt can add 100 points to your score, while paying off your mortgage or other installment debt will add just five or ten points.
  4. Keep your credit card balances under 10%. Even if you pay off the balance in full each month, credit card companies report the amount you charge each month. If you are applying for a bad credit home loan, stop using your cards for a few months.

At MyFICO.com you can find more tips for improving your score. Find out where you stand now the lenders by completing the form on this page. The bottom line is that a higher score will make refinancing and qualifying for the best interest rates easier.





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