George RichardsonBy George Richardson

If you’re thinking about getting a mortgage loan in the next six months, it’s time to check your credit score.

Your credit score is the single most important factor in determining the percentage rate of your loan. The higher the credit score, the lower the interest rate. Over the life of a loan, this can mean thousands of dollars in interest. So how can you increase your credit score?


Your credit score is the single most important factor in determining the percentage rate of your loan.


First, you need to get your credit report. Many credit cards, such as Capital One, offer this service for free as well as Credit Karma. Carefully, line by line, go through and look at each item. Is there a medical bill that went into collections? Do NOT pay them off until after you speak to with a credit counselor or mortgage loan originator. Most of the time paying off medical collections is not required to get a mortgage and doing so can actually hurt your credit score in the short term. If you have a bill that erroneously went into collections, you’ll need to get that cleared off. I’ve often seen this happen with Workers’ Compensation claims in which the person was unaware that the bill even existed. A credit counselor or mortgage loan originator can help you with that as well.


You may notice that you have credit cards you haven’t used in a long time. Don’t close them! Credit agencies look at the percentage of credit you’re using of your total available credit. Make sure that percentage is very low. If you have $20,000 in available credit and you’re using $2,000 of that, then you’re using 10%. However, if you close $5,000 worth of available credit now that $2,000 represents 13% of your available credit. If you want to cancel any credit cards, wait until after you have closed the loan on your new home. Here’s a list of my other Don’ts!

  • Don’t open any new credit cards or take on any new loans. Instead, take a hard look at the credit you’re already using and plan over that six-month period to pay down balances.
  • Don’t buy big-ticket items, such as a car or expensive furniture that needs financing. This will drive up your debt ratio and make it harder for you to secure a loan.
  • Don’t dispute items. Lenders can’t consider a borrower’s credit until all disputed items are off the credit report.


Managing your credit score well will have a very positive impact on the type of loan and the interest rate you will qualify for, so be savvy about your credit.


George Richardson, Branch Manager at Angel Oak Home Loans in Cornelius, has more than 30 years of mortgage lending experience. He can be reached at or 704-942-0152.