Credit Management Makes Refinance Reality

By Debbie Wilson
LoanPage.com Columnist

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So your goal is to get the best home loan mortgage. When looking to refinance your current mortgage loan, a clear credit management strategy can help you obtain that perfect loan.

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Credit Management "Do"

If you're ready to find the best refinance mortgage, there are a few things you'll want to do beforehand. First, pay all your bills by the due date. Any missed payment automatically lowers your credit score. Secondly, keep account balances below your available credit limits. And finally, remove any errors from your credit reports, especially if you're applying for a loan within the next 3 months. You can write to the original vendor or credit bureau to get rid of any inaccurate or unauthorized charges. Just remember to follow up with them until the problem is completely resolved.

Credit Management "Don't"

One of the biggest errors people make when undergoing credit management is that they fail to borrow at all. If you don't use credit, you won't have a credit score. And when you apply for credit you'll have a difficult time. Another critical "don't" is to combine accounts. Transferring balances from multiple cards to one card may seem like a good idea, but by doing so you actually reduce your available credit limit. For example, if you have two accounts, each with a $10,000 limit and $3,000 balance, by transferring your balance to one card, you end up with a $10,000 limit overall and a $6,000 balance. That means you are now utilizing 60% of your available credit limit, rather than only 30% on two separate cards. Higher utilization rates tend to lower your credit score.

Ultimately, refinancing your mortgage can save you a good deal of money in interest expenses, Just make sure you get started on your credit management strategies before you apply for that new home loan. You'll be glad when you maintain healthy credit and obtain that perfect mortgage.

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

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