When you have a low credit score, your chances of qualifying for a mortgage are lower as well. Even if you manage to get approved, you can expect to be offered a loan with higher interest. For these reasons, it is mandatory for you to make efforts for improving your score. Here are some techniques which have been proven to work.

Know the requirements.

You should have a clear goal so that you can channel your efforts and stay motivated. Currently, you have to have a credit score of at least 640 to qualify for a conventional mortgage loan. Applicants with a score over 720 will have the best chances of getting approved. If you want to secure a top deal, your score has to be above 780. Now that you know where you are headed, you have to use the following ways to get there.

Repay as much debt as possible.

This will not only help you boost your credit score, but will also lower your debt-to-income ratio. Keep in mind that in order to get approved for a mortgage, your DTI has to be no higher than 43%. The fastest and most efficient way for debt repayment is to use each and every extra dollar for the purpose. You may want to restrict your spending as well, if your score has been severely damaged.

Use your credit cards wisely.

You should check the limit on each card and spend no more than a third of it. If you can, you should try to use up less than 15% of the limit on each card. It is crucial that you repay credit card debt in full ever month. It is best if you use all of your cards. You should terminate ones that you do not use. It is equally important that you do not get new ones.

Avoid debt consolidation.

You should not transfer all outstanding balanced on loans in one account. You should not do this with credit card balanced either. Such a move would only damage your score even further.

Do not get new loans.

Getting into more debt will not help to improve your score. It will have an adverse effect on your debt-to-income ratio as well. Just try to stay away from consumer loans and lines of credit during the months prior to applying for a mortgage.

Request goodwill adjustment.

This is a written request asking the lender to erase a late payment or a similar kind of small issue from your credit record. You can expect a positive reply if you have been making timely payments for the past year or so. Basically, you have to give the lender a reason to fulfill your request.

Have credit report errors fixed.

Review the report and identify errors. Then you need to call the credit bureau or the respective lenders to fix them. It is as simple as this.

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