5 Home Finance Tips to Improve Your Credit Score

Whether you are looking to refinance your home loan or simply clean up your credit, costs and payments associated with your home carry greater weight when it comes to your credit score than other types of financing. Discover at least ways five ways you can improve your credit or keep your score soaring high – and how they relate to your home.

Make Mortgage Payments on Time

Your home loan tends to be one of your biggest monthly expenses. It’s also one of the most important payments when it comes to your credit score. Paying your monthly bills on time makes up the biggest part of your credit score. And of the monthly payments that you make, paying your mortgage on time weighs more on your credit rating than other types of payments, including credit cards and auto loans.

[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]

Avoid Additional Mortgages

If you can, avoid taking on a second mortgage, which also may be called an home equity line of credit or a home equity loan. Taking on additional debt weighs down your credit score because you’re extending yourself further financially, which carries a greater risk of late payments and default.

Another factor included in your credit score is the amount of outstanding debt you have – the more you have, the greater the risk you are to a lender. Since mortgage debt tends to be greater than traditional credit accounts, it can affect your credit score even more than other types of credit.

Be Careful with a Cashout Refinance

When you have equity in your home and a high interest rate on your first mortgage, you may also consider a cashout refinance option. While a straight refinance doesn’t typically affect your credit score, a cashout refinance can lower your score because you are increasing your amount of outstanding debt.

Pay Property Taxes on Time

Another payment of high importance is your county property tax bill. You may have this set up with your mortgage company to pay for you automatically. If not, you are responsible for the payment and it is imperative that you make the payment on or before the due date. If you do not pay your property taxes, the county may place a tax lien on your property. While late payments on real estate taxes typically don’t affect your credit score, unpaid taxes that turn into a lien on your property will drag your score down.

Refinance with Good Credit

You also want to time a refinance when it is right, which is when your credit score is high enough for approval. If you are planning a refinance, check your credit report and credit score first, and take care of any inaccuracies or problems. Each time you apply for a loan or credit, your credit score takes a small hit, so it’s a good idea to make sure your credit is in good standing and your chances of approval are good before you apply.

Credit is and always has been an important aspect of your financial health. Believe it or not, the payments related to your home are some of the most important payments on your list of bills. When you make all of your payments on time, you can increase your credit score or keep it high. Make an effort to pay any costs related to your home on time (mortgage and taxes) and avoid taking on too much house debt. and your credit score will fare well.

Whether your credit score could use a slight tweaking or you need a complete credit makeover, Quizzle’s Credit Improvement Program can help. Learn the ins and outs of credit reports and scores, and what you need to do to reach your full credit potential.

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