Credit scores play an important role in determining your mortgage rate offered by lenders. A credit score is based on credit history, including payment history, credit utilization, length of credit history, types of credit accounts, and recent credit inquiries. A higher credit score indicates a lower risk for the lender, while a lower score indicates a higher risk.

Borrowers with higher credit scores will be offered lower interest rates, which can result in lower monthly payments that could save thousands of dollars over the life of the loan. On the other hand, borrowers with a lower credit score will have higher interest rates, resulting in higher monthly payments and increased costs over time.

Here are a few tips to keep your credit score in good standing:

1. Pay your bills on time, this seems obvious, but being late on monthly obligations can negatively impact your credit score.
2. Keep your credit card utilization below or at 30%. Your credit utilization is the percentage of your available credit. Keeping it low helps improve your score.
3. Avoid opening too many credit accounts, opening too many accounts within a short period of time can raise red flags and negatively impact your credit score.
4. Maintain a long credit history, the length of your credit history is an important factor in determining your credit score. Keeping older credit accounts open and in good standing will improve your score.
5. Regularly review your credit score for any errors or inaccuracies, this can be done for free on an annual basis using sites like credit karma and Experian.
6. Limit your overall debt if possible. Lenders consider your overall debt when evaluating your creditworthiness.
7. If you’re struggling with credit issues and need some assistance you can always reach out to us at Canyon Mortgage. We can assist you with some advice on how to improve your credit score.