A credit score is a standard rating used by lenders and other institutions to determine a person’s level of financial risk. Having a better score can improve your chance of being approved for a mortgage or getting a lower interest rate on a home loan. Since this rating can change over time, it’s important to know what your score is and how you can change it. If you’re looking to improve your financial profile, here’s what you should know about taking control of your credit.     

What Factors Influence Your Credit Rating?

Debt-To-Income Ratio

A debt-to-income ratio illustrates how much debt you have compared to how much money you’re bringing in. Creditors will be less likely to approve you if your ratio is 43% or higher, as people in this range tend to have trouble paying off debts.

Payment History

Your credit score will also reflect how responsible you are at paying off debt. Missed or late payments can lower your score. However, paying more than the minimum amount owed can gradually improve your rating.

Credit History

Having little to no history of debt will make it harder to get a good score. Having many instances of new credit in a recent period can also lower your score. For a better rating, it’s better to have a mix of credit types—such as fixed installment loans and revolving debt—over an extended period.

How Can You Manage Your Credit Score Responsibly?

Monitor Your Report

Check up on your score at least once a year by requesting it for free through your bank or a trusted credit bureau. This regular assessment will allow you to catch and resolve problems early on.

Pay Strategically

First, always make payments on time. This includes credit card bills, student loans, and rent and utilities. Next, work to reduce your debt-to-income ratio by increasing payment toward accounts with high-interest rates and balances. The sooner you pay off your debts, the better your credit score will be.

Limit New Credit Accounts

Avoid taking on lots of new debt within a short period. For example, if you’re a prospective homeowner, you should avoid taking out new credit cards before applying for a mortgage.

If you’re concerned about your credit score’s impact on future mortgage decisions, turn to loanDepot - Deuane Woodard, Loan Consultant. Serving North Richland Hills, TX, this loan consultant will introduce you to a variety of lending options designed to benefit those with low credit scores. This provider can also guide you through the mortgage refinancing process if you’re a homeowner looking to lower current interest rates and pay down debt faster. For more details on these services, visit this mortgage loan officer online or call (817) 875-6043.

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