Here’s how to boost your credit score and get a low mortgage rate


People wait to view a home for sale in Garden City, Nassau County, New York on September 6, 2020.

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Mortgage interest rates are close to historic lows. Still, if you want to take advantage of these rates, check your credit score first.

This three-digit number determines whether you can get a mortgage, what type of loan you’ll get, what you’ll pay in interest, and possibly how much money you need for a down payment. In this hot housing market, it could make the difference to your success, experts say.

The benchmark 30-year fixed mortgage rate is currently 3.090%, according to Bankrate.

“You lock in that rate for potentially 30 years, so you’re saving an incredible amount of interest,” said licensed financial planner Faron Daugs, founder and CEO of Libertyville, Illinois-based Harrison Wallace Financial Group.

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Credit scores range from 300 to 850. A good score is 670 to 739, a very good is 740 to 799, and 800 and above is considered excellent, according to FICO, a leading credit scoring company.

Homebuyers who took out mortgages in the fourth quarter of 2020 had a median score of 786, according to the Federal Reserve Bank of New York.

If you’re not good enough, it doesn’t necessarily mean you’re out of the market. You can perform several moves to improve your score.

Check your credit history

You are entitled to one free credit report per year from the three major credit reporting companies: Experian, Equifax and TransUnion. You can contact each directly or you can access them through

Not only do you need to know your score, but you also need to make sure there are no mistakes or unintended skeletons in your closet, like a missed payment you forgot.

Writing your report before applying for a mortgage or pre-approval, ideally a few months in advance, will give you time to correct any problems.

Reduce your credit utilization rate

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Lenders will consider whether you have high balances on your credit cards.

Even if you pay your credit card bills in full each month, you can still have a high utilization rate, said Ted Rossman, senior industry analyst at Bankrate and

For example, if you make purchases of $3,000 and have a limit of $5,000, you are using 60% of your available credit. Try to keep it below 30%, Rossman said. Those with the best credit ratings keep it below 10%.

Making an additional payment in the middle of the billing cycle can help reduce the balance before the statement comes out.

Pay bills on time

Late or missed payments can cause your score to drop.

The easiest way to avoid this is to set up automated payments for your bills, Daugs said.

Get a credit builder loan

Some community banks and credit unions offer credit building loans, which are designed to help the holder build credit as they make payments.

You will pay interest, although some lenders may refund the fee after the loan is paid off.

Become an authorized user on someone’s credit card

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If you don’t have credit, one of the best ways to start building it is to become an authorized user on someone else’s card, Daugs said.

“Make sure you do it with someone with good credit,” he warned.

If the account remains in good standing, it will have a positive impact on your credit.

Alternate credit rating won’t matter

You can boost your credit with alternative solutions, which count bills that don’t normally appear on your credit report. However, they may not work for government-backed mortgages.

Experian Boost can increase your score on Experian by counting phone, utility, and streaming service bills, while eCredable Lift reports utility and phone payments to TransUnion. Perch allows you to increase your score with recurring expenses such as subscription services and rent.

The platforms use a newer version of the FICO algorithm, Rossman said. Government-backed mortgage companies Fannie Mae and Freddie Mac are asking for older versions, so they won’t see the score improvement.

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