If you are considering refinancing or taking out a new mortgage you can save yourself a lot of money by organizing your finances in advance. If you have a poor credit rating this becomes even more important. There are steps you can take to improve any credit score; a common mistake many people make is neglecting to do this before applying for a mortgage. Here are several tips to help give your credit a tune-up before applying for a mortgage loan.

Limit Your Spending

It is important to reduce your debt in order to raise your credit score. It is a good idea to avoid having too many open lines of credit to reduce the temptation to spend. If you lack self-control when it comes to impulsive spending, closing credit card accounts may be your only option to reduce spending.

Pay Down Your Balances

Small balances on your credit cards will not negatively impact your credit score. If you use credit cards for day-to-day purchases, it is important to pay off the balances on a regular basis. If you only make the minimum payments required you will never payoff the balance; these minimum payment amounts only cover the finance charges due. Keep your credit card balances low and your credit score will go up.

Dont Use Cash Advances

Your credit card offers cash advances at automatic teller machines; however, these advances come with ridiculously high interest rates. Using cash advances will make it more difficult to pay down the balances on your credit cards and cost you significantly more in finance charges.

Make All Your Payments on Time

A significant amount of your credit score is based on your payment history. Never miss or make your payments late; these actions have a negative impact on your credit score. If you miss payments credit card companies charge late fees and could raise your interest rate. If you get too far behind it could be impossible to reconcile which will result in a black mark on your credit history. To learn more about your mortgage options, including common mistakes to avoid, register for a free mortgage guidebook.

Louie Latour

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Five Things You Need to Know before Refinancing Your Mortgage,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit RefiAdvisor.com.