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With a clean credit report, you can get a better mortgage interest rate. It can also improve your chances of getting a home loan. If your credit isn’t as good as you’d like, it is never too late to take steps to improve it. Here are ways to increase your credit score before applying for a loan.

Pay Off Delinquent Accounts 

Delinquent accounts, collections, charge-offs, and judgements can have severe impacts on your credit. You don’t need to pay off everything at once. Paying off each account one at a time and/or setting up an arrangement with creditors can help.

Keep your accounts current by making timely monthly payments; if you have a late payment, for example, continue being consistent and older delinquencies will be less impactful. You might want to wait six months before applying for new loans, so lenders know you are serious about getting approved. And, if you’ve been paying credit cards on time, try to reduce your balances.

Reduce Debt-to-Income Ratio

Your debt-to-income ratio is a factor lenders often look at. If your debt is high relative to your income, your eligibility for a loan may be questioned. Bringing your monthly payments down to about 12% of your income or less can help. A mortgage may raise this to as high as 43%. To reduce it, you can work to decrease your debt or increase your income by finding a side gig, working additional hours, or getting a second job.

Don’t Incur New Debt

Taking on new debt when looking to qualify for a mortgage is a bad idea. Lenders are more likely to reject your application because your behavior makes you more of a risk. It can give the impression you are irresponsible and may be unable to keep up with monthly payments. Avoid applying for new credit cards as well, as credit inquiries and additional credit card debt can affect your eligibility for a loan.

Check Credit Reports

Reviewing your credit report can help identify anything that’s hurting your credit. You can get a copy of your credit report from any of the three credit reporting agencies—Equifax, Experian, and TransUnion—once a year. It shows the types of accounts you have and provides details on payment history. Track your FICO score as well; it should be at least 720 for a good interest rate. You can increase your score by understanding how it is calculated (35% is determined by your payment history, 30% is determined by credit utilization, and 15% is the length of your credit history; a mix of credit helps as well).

Dispute Inaccurate Information

Errors can have serious impacts on your credit rating. If there are any disputed accounts, close them before applying for a loan. It’s also important to fix any errors; inaccurate information can include late payments, which can be corrected by submitting a dispute letter to the credit bureau in question. Credit bureaus are required to investigate legitimate disputes within 30 days. Disputing information can get mistakes or misinformation deleted from your credit report. If you’re a victim of identity theft, contact the credit bureaus right away.

Contact American Credit

A mortgage lender may scrutinize your credit more than you think. If you find inaccuracies on your credit report, contact American Credit. We provide credit restoration services and can analyze your situation to help improve your credit. Our credit repair service is backed by a pre-litigation process that uses the law to get creditors, lenders, and reporting agencies to respond. To request a Credit Repair Consultation in Los Angeles, call 855-384-0868 today.