Personal finance

Want to refinance your mortgage? Do These 7 Things Now Personal finance

3. Check your credit score

Before making a loan decision, it is important to check your credit rating as well as your credit report.

Your credit score will largely determine the favorable rate a lender will offer. The higher your score, the lower the rate you qualify for and the lower your monthly payments will be. If your score is low, look for ways to improve your credit score well before you apply for a loan.

Your credit report shows the information on which your score is based. This is where you can check for any errors that can negatively affect your credit score. If you find any errors in your report, you can contact the credit bureaus to have these items removed. Be prepared to provide documentation proving the error.

As part of the consumer protections put in place by the CARES Act, you can get a free weekly credit report from any of the major reporting bureaus until April 2022. (As a general rule, you are entitled to one free report from each credit reporting company per year.)

You should also be aware of the factors that could temporarily adversely affect your credit score. Applying for a credit card, personal loan, or car loan just before, at the same time, or right after the refi application will lower your score, even temporarily.

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