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When it comes to getting the best possible interest rate on your mortgage, a good credit score can go a long way.  Your credit score is a representation of how likely you are to pay your debts in a timely manner.  In other words, it is a representation of how much risk you are to a lender as a potential borrower.  A higher credit score means less risk.  A lower credit score means more risk.  It is common for lenders to give a higher interest rate when a borrower has a lower credit score to accommodate for the additional risk.


Here is a list of some simple things you can do to improve your credit score to ensure that you are getting the best possible interest rate on your loan.

Take care of recent derogatory debt.  The most impactful derogatory debts are going to be those that took place in the last two years.  Any charge offs, collections, and past due balances within this time frame are items of concern.  Anything before this time frame will have less impact on your credit score and could actually lower your credit score if you pay them off.  Focus on paying off any delinquent items within the last two years.

Don’t close existing accounts. Your open credit card accounts are very important because they establish a credit history.  Even if you have cards that you don’t use very often, they still show the ability to borrow and repay.

Try to keep balances relatively low.  It is ok to have a balance on your credit cards.  In fact, having a balance that isn’t too high or too low can improve your score.  Maintaining a balance of somewhere around 30% on all of your accounts shows an ability to maintain credit and still make payments responsibly.  If you are unable to pay a large balance down all at once, you can try increasing your credit line.  This will lower the ratio of debt to available credit.

Correct any errors on your credit report.  Credit agencies don’t always have complete or up to date information.  There may be inaccuracies on your credit report that can hurt your score.  You can get this information corrected by going through the dispute process with any credit agency.  They are required to respond to your inquiry within 30 days.


There are many ways to improve your credit score.  These are just a few simple tips that can really go a long way in improving your score.  Maintaining good credit will help you get a lower interest rate on your mortgage.  A lower interest rate can literally save you thousands of dollars over the life of your loan.  Please contact your licensed mortgage loan officer if you have any questions about these tips or for other ideas on how you might be able to improve your credit score.