If you’re looking to buy a home this year, you probably know that lenders look at your three-digit FICO credit score to determine your credit worthiness.
If you’ve done your reasearch, you know that the best mortgage interest rates go to those with scores in the mid to high 700s. For Federal Housing Administration (FHA) loans, scores in the mid to high 600s will suffice. Of course, qualifying for a mortgage also relies on other pertinent financial info such as your salary, debt-to-income ratio, down payment, etc.
What If Your Score Isn’t What You Want?
However, if you’ve made some financial missteps – like many other would-be home buyers – your score may not be high enough for a specific loan program that gives you your preferred interest rate. You know what score you need for that loan program, but the big question is: How do you achieve that specific FICO score?
Predict, Plan and Work Toward That Score
To help you qualify for the mortgage and interest rate you want, FICO has introduced a new program called “Score Planner” that will be available through participating banks, mortgage lenders, credit card companies and others.
Best Practices Remain The Same
This tool will provide you with a number of specific steps you should follow to improve your FICO score within a set amount of time. Each step will be customized for your personal financial situation and describe in detail what you must do to move your FICO score higher.
Of course, the best action to maintain and improve your credit score remains to pay all your bills in full, on time, every month; reduce any debt you have with credit cards or loans as much as possible; do not use more than 30% of your available credit; and refrain from opening new credit cards and loans until after your mortgage is closed/settled. If you continually practice those steps, your credit score will remain strong.