Choosing the Right Credit Card: Tips and Tricks

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Key Factors Mortgage Lenders Consider

Your Credit History

When applying for a mortgage, lenders delve deeply into your credit history, not just your credit score. They look for:

• Good Credit Score: A FICO® Score of at least 620 is often required, but a score of 670 or higher improves your chances. Lower scores may be accepted for government-backed loans.
• Strong Payment History: Lenders want to see a history of on-time payments on credit cards, loans, and other credit lines.
• Low Credit Utilization: Using less than 30% of your available credit is ideal.
• Minimal New Inquiries: Too many recent credit applications can be a red flag.
• No Red Flags: Negative marks like bankruptcies or delinquencies can hurt your chances.

How to Improve Your Credit:

• Make all debt payments on time.
• Catch up on any past-due accounts.
• Reduce credit card balances.
• Avoid new credit applications before applying for a mortgage.
• Keep old credit card accounts open if they are in good standing.

Your Income and Savings

Lenders assess your income and savings to ensure you can afford the loan and handle financial fluctuations.

• Steady Income: Consistent and predictable income is preferred.
• Verifiable Information: Lenders will verify your income through tax returns and pay stubs.
• Savings Documentation: Bank statements and asset documentation are also reviewed.
• Adequate Assets: Having significant assets can make you a less risky borrower.

How to Boost Your Income and Savings:

• Avoid job changes before applying for a mortgage.
• Consider a second job or side hustle, ensuring you can verify the income.
• Budget and cut nonessential spending to build savings.

Understanding these factors can help you improve your financial situation and increase your chances of mortgage approval. For personalized assistance, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate the mortgage process and secure your dream home.