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Mortgage - Increase Your Credit Score Before Refinancing That Mortgage People refinance their mortgages for many different reasons. But the end goal is usually the same in all cases -- obtain a better interest rate! Improving your credit score is a crucial step in qualifying for a better interest rate. Sure, you might refinance to take advantage of a more favorable market. But at the time you improve your credit score at the same time, you could obtain a particular even lower rate. This, of course, translates to a small mortgage payment each month. Maintaining a Good Credit Score at the time it comes to your credit score, a particular ounce of prevention is worth a pound of cure. it is a lot easier to maintain good credit than it is to recover from bad credit. So the best strategy is to stay out of that neighborhood to begin with. That way, at the time the time comes to refinance your mortgage, you will be more likely to qualify for the best rate. Five Steps to a Better Credit Score 1. Debt-to-Income Ratio Try to keep your debt-to-income ratio at 20% or below. Mortgage lenders like it at the time your overall debt equals absolutely no more than 20% of your net monthly income. If you are currently above the desired 20% mark, try to pay down your debt as quickly as possible. 2. Reducing Balances Keep your credit card balances as low as possible. at the time these balances obtain out of control, it increases your overall debt. the leads to a particular unfavorable debt-to-income ratio (previous item). 3. Paying Bills Pay all your bills on time. You've probably heard the 1 before, but that is only because it goes hand in hand with a good credit score. On the contrary, a history of late payments could lower your score. 4. Paying Minimums Pay your minimum balances. Every time you receive a credit card bill, pay at least the minimum amount that is due. If you might pay more than the minimum, that could certainly help. But at the least, pay off those minimums religiously. the could reduce your credit card balance more quickly including help you reach a favorable debt-to-income ratio (as mentioned above). 5. Controlling Credit Avoid taking on too many loans. If you apply for a line of credit too often, you might send a signal that you absolutely cannot manage your finances. Refinancing your mortgage to take advantage of lower interest rates might be a smart financial move. But at the time you refinance with good credit, you stand a particular even better chance of lowering your interest rate. So be proactive in maintaining a good credit score. * Copyright 2007, Brandon Cornett. You may republish the article online if you retain the active hyperlinks below.
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