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.
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💼 W-2 vs. 1099 Income: How It Impacts Your Mortgage Approval 🏡
💼 W-2 vs. 1099 Income: How It Impacts Your Mortgage Approval 🏡
📊 Self-Employed or Salaried? What Lenders Look for in Your Income 💸
💼 W-2 vs. 1099 Income: How It Affects Your Home Loan
When it comes to buying a home, how you earn your income matters—a lot. Whether you're a salaried W-2 employee or a self-employed 1099 contractor can drastically change the mortgage process and the documentation you'll need.
✅ W-2 Income: The Lender’s Favorite
W-2 income is often seen as more stable and predictable, which makes it easier to verify. Lenders typically only need:
· Your last two years of W-2s
· 30 days of pay stubs
· Recent bank statements
If your employment is consistent, you’re usually approved quicker with fewer hurdles.
⚠️ 1099 Income: More Paperwork, More Scrutiny
Self-employed borrowers or independent contractors are usually paid with 1099s. That means lenders will ask for:
· 2 years of personal and business tax returns
· Profit & loss statements
· Business bank statements
· Possibly a CPA letter
Lenders want to see that your income is consistent and sustainable over time. This can lead to more documentation and a longer underwriting process.
🏡 Can You Still Qualify with 1099 Income?
Absolutely. In fact, many lenders (including us at Medallion Mortgage) offer bank statement loans or non-QM products that cater specifically to 1099 workers. These programs allow you to qualify without tax returns, focusing instead on your cash flow.
🧮 Key Differences at a Glance:
Criteria
W-2 Borrowers
1099 Borrowers
Docs Required
W-2s + Pay Stubs
Tax Returns + P&L + Bank Statements
Approval Time
Faster
Longer
Income Scrutiny
Minimal
High
Program Options
Conventional, FHA, VA
Bank Statement, DSCR, Non-QM
🧠 Final Thought:
Whether you’re clocking in or running your own business, you can buy a home. You just need the right mortgage strategy—and the right broker to guide you.
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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory
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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/