Here are a few ways you can take control of your credit score.

If you’re thinking of buying a house or refinancing, the first thing you need to do is take a hold of your credit score. The higher your score, the better your rate and the more favorable your terms. I’m not an expert, but I have a good grasp of what will affect your interest rates. So today I want to share a few tips to help strengthen your credit:

1. Never pay off your collections. A lot of people think that paying off their collections will improve their credit when it’s usually the opposite. Those collections are usually dormant, and when you pay them off, they reactivate that account. Instead of helping your score, it ends up hurting it.

If you’re going to pay off a collection, make sure whoever holds that account promises to give you a deletion letter. That way, not only will it show as paid off, but it will also completely disappear from your report.

2. Don’t max out your credit cards. A lot of people max out their credit cards to get the funds towards a down payment. That’s a huge mistake. As you max out those cards, your score will go down, which will hurt your mortgage rate.

“We’re not like traditional banks; we don’t just say yes or no.”

3. Don’t close your credit cards. A lot of people think closing their credit card accounts will improve their scores. It usually won’t because there are three main factors within these accounts that determine your credit: how long the account has been open, the payment history, and the balance versus the limit. As a general rule of thumb, try to keep your balance under 30% of the limit; however, every card is different.

We use a credit simulator to tell us what will happen to a client’s score depending on what they do. When you’re thinking of buying a house or refinancing, it’s always good to sit down and run your situation using our credit simulator. That way, you can know what you need to do to increase your score as much as possible.

Conventional loans are extremely credit-driven, so whether you’re refinancing or purchasing, you can get a killer deal if you have a 700 credit score. If you’re not quite there, we can advise you on how to improve your score. If there’s a problem that’s above our pay grade, we have a few different collection companies we can refer you to.

We’re not like traditional banks; we don’t just say yes or no. If you don’t qualify with us, we will set up a roadmap to help you qualify in the future. If you have any questions or need help with your credit, give us a call at (619) 948-2996 or send us an email. We’d love to talk with you.