Tips on How to Improve Your Credit Score
Hey folks, it's time to get real about your credit score. If you're anything like me, you probably don't pay much attention to it until it's time to apply for a loan or credit card. But did you know that your credit score can make or break your ability to obtain a mortgage loan?
.
When you apply for a mortgage loan, lenders take a close look at your credit score and credit history. They want to know if you're a responsible borrower who will pay back the loan on time and in full. A good credit score can help you qualify for a mortgage loan with a lower interest rate and better terms, while a poor credit score can make it more difficult to get approved and result in higher interest rates and less favorable terms.
.
In short, your credit score is one of the most important factors that lenders consider when deciding whether to approve you for a mortgage loan. By taking steps to improve your credit score, you can increase your chances of getting approved for a loan with better terms and save yourself thousands of dollars in the process.
1. Check your credit report regularly
This is a no-brainer, but it's worth repeating. Make sure to check your credit report for any errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus every year, so take advantage of it.
2. Pay your bills on time
This one seems obvious, but it's worth emphasizing. Late payments can have a big impact on your credit score, so set up automatic payments or reminders to make sure you're always on time.
3. Lower your credit utilization ratio
Your credit utilization ratio is the amount of credit you're using compared to your credit limit. Aim to keep your utilization ratio under 30% to improve your score.
1. Check your credit report regularly
This is a no-brainer, but it's worth repeating. Make sure to check your credit report for any errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus every year, so take advantage of it.
2. Pay your bills
on time
This one seems obvious, but it's worth emphasizing. Late payments can have a big impact on your credit score, so set up automatic payments or reminders to make sure you're always on time.
3. Lower your credit utilization ratio
Your credit utilization ratio is the amount of credit you're using compared to your credit limit. Aim to keep your utilization ratio under 30% to improve your score.
4. Increase your credit limit
If you're struggling to keep your credit utilization ratio low, consider asking for a credit limit increase. Just make sure not to use the extra credit as an excuse to spend more.
5. Diversify your credit
Having a mix of credit types (like a credit card, auto loan, and mortgage) can improve your credit score. But don't open new accounts just to add diversity - only take on credit that you actually need and can handle responsibly.
4. Increase your
credit limit
If you're struggling to keep your credit utilization ratio low, consider asking for a credit limit increase. Just make sure not to use the extra credit as an excuse to spend more.
5. Diversify your credit
Having a mix of credit types (like a credit card, auto loan, and mortgage) can improve your credit score. But don't open new accounts just to add diversity - only take on credit that you actually need and can handle responsibly.
Blogs
The Top 5 Mortgage Mistakes to Avoid
Buying your first home can be both exciting and nerve-wracking at the same time. With so many things to consider and....
Mortgage Do and
Do not list
Mortgages can be tricky, and it's easy to make mistakes that can end up costing you dearly. That's why we've put together this list....
Tips On How To Improve Your Credit Score
Let's talk about some ways you can improve your credit score! Your credit score is actually a big deal, and it can affect...
💰 Why the Lowest Mortgage Rate Can Be the Most Expensive Loan 📉
💰 Why the Lowest Mortgage Rate Can Be the Most Expensive Loan 📉
🏦 Mortgage Points, Prepayment Penalties & Refi Traps: The True Cost of “Low Rates” 🔍
Why the Lowest Rate Is Often the Most Expensive Loan
Most borrowers are trained to shop one number: the interest rate.
But sophisticated borrowers and real estate investors understand something different:
The lowest rate on paper can produce the highest total cost over the life of the loan.
As a mortgage broker and capital advisor at Medallion Funds, I regularly review loan estimates where the “lowest rate” option quietly contains points, prepayment penalties, and structural exit traps that cost tens of thousands more over time.
Let’s break down where the hidden cost actually lives.
1️⃣ Points vs. Lender Credits: The Rate Illusion
A lender can lower your interest rate — but rarely for free.
Discount Points
Paying 1–2+ points (1 point = 1% of loan amount) reduces your rate.
On a $750,000 loan, 2 points = $15,000 upfront.
The real question:
Will you hold the loan long enough to recover that cost?
If you refinance, sell, or recapitalize in 3–5 years, you may never reach break-even.
Lender Credits
The opposite structure increases the rate slightly but provides a lender credit to offset closing costs.
For borrowers who plan to refinance, reposition, or sell within 36–60 months, credits often outperform points.
Strategy beats rate shopping.
2️⃣ Prepayment Penalties: The Silent Wealth Transfer
Many “lowest rate” loans — particularly:
·DSCR loans
·Commercial mortgages
·Non-QM investor loans
·Certain bank portfolio products
Include prepayment penalties.
Common structures:
·3-2-1 step-down penalties
·5-year declining penalties
·Yield maintenance
·Defeasance (commercial)
If rates fall and you refinance early, you could pay:
·$25,000
·$50,000
·Even six figures on larger deals
A lower coupon becomes irrelevant if exit flexibility disappears.
Sophisticated borrowers price optionality — not just rate.
3️⃣ Exit Costs & Refinance Traps
The most expensive loans are often those that restrict your ability to exit.
Examples:
Balloon Structures
A 5-year balloon at a low rate sounds attractive.
But what if market rates rise at maturity?
Now you refinance into:
·Higher rates
·Stricter underwriting
·Lower valuation
·Additional equity injection
DSCR Refi Trap
If you close at maximum leverage and rents soften, your DSCR may not support refinancing later — even if rates improve.
That low initial rate becomes a liquidity event.
4️⃣ Total Cost of Capital > Headline Rate
Professional borrowers evaluate:
·APR
·Total interest paid
·Points amortization
·Exit penalties
·Flexibility
·Refinance assumptions
·Liquidity impact
The correct framework is:
Cost of capital over your intended hold period.
Not the lowest rate today.
5️⃣ When a Higher Rate Is Actually Smarter
You may intentionally choose:
·Slightly higher rate
·No prepayment penalty
·Lower upfront points
·Stronger refinance flexibility
That structure can:
·Protect liquidity
·Reduce risk
·Improve IRR
·Preserve exit options
In many investor scenarios, that flexibility creates more long-term wealth than saving 0.25% on rate.
The Bottom Line
The lowest mortgage rate is often the most expensive loan because it hides cost in:
·Points
·Penalties
·Reduced flexibility
·Exit risk
Smart borrowers don’t chase rate.
They engineer structure.
If you want to review your loan options through a capital strategy lens — not just a rate sheet — connect with Medallion Funds.
Because structure > headline pricing.
https://www.billrapponline.com/
https://findamortgagebroker.com/Profile/WilliamRappJr28883
https://billrapp.commloan.com/
https://billrapponline.com/financingfuturescre-houston-katy
https://houstoncommercialmortgage.com/
https://author.billrapponline.com
https://doctorvideo.billrapponline.com/
https://veteransvideo.billrapponline.com/
https://mortgageviking.billrapponline.com/
https://fha203h.billrapponline.com/
https://renovationvideo.billrapponline.com
https://medallionfunds.com/bill-rapp/
https://www.amazon.com/dp/B0F32Z5BH2
https://veed.cello.so/FOmzTty6oi9
https://buymeacoffee.com/vikingente3
https://creplaybookseries.billrapponline.com
https://creplaybook.billrapponline.com/
© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory
10 Tips for First-Time Homebuyers
Buying your first home can be both exciting and nerve-wracking at the same time. With so many things to consider and....
How To Choose the Right Lender for You
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy
Refinancing youe loan and when to do it
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy
🧮 Renovation ROI Calculator
🛠️ Renovation ROI Calculator 💰
Copyright ©2021 | Mortgage Viking Team
Licensed to Do Business | NMLS # 228246
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Copyright © 2021 | Medallion Funds
Corporate | NMLS ID NMLS # 1825831
Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014
Corporate NMLS NMLS # 1825831 | Company Website: https://medallionfunds.com/bill-rapp/
Copyright ©2021 | Mortgage Viking Team Licensed to Do Business | NMLS # 228246
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply
Corporate | NMLS ID NMLS # 1825831
Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014 https://medallionfunds.com/bill-rapp/