One easy way to save on your homeownership costs is to refinance your mortgage to get a lower monthly payment. However, this is hard to do if your credit is holding you back. The good news is that your credit doesn’t have to be stellar in order to refinance your mortgage. In fact, many lenders will allow you to refinance with a credit score of just 620 or more.
By making the right moves over an extended period of time, you may be able to increase your credit score, start taking advantage of low interest rates and bring down your monthly mortgage payments.
Plus, a lower credit score may also lower your monthly homeowners insurance premium.
Here are a few tips to help you increase your credit score:
Always make payments on time. Paying a credit bill late or missing a payment altogether is an easy way to take a chunk out of your credit score. If you have trouble remembering your payment schedule, consider setting up automatic payments.
Make more than the minimum payment. One of the most important parts of your credit score is your credit utilization ratio. This is the amount of available credit that you are currently using. Lowering this ratio by paying down your credit card balances may raise your credit score.
Avoid getting rid of old credit cards. If you have cards you no longer use, you may be tempted to close them out. But this could actually hurt your score. Instead, give your card some minimal use each month and leave it open to keep your credit utilization ratio low.