In today’s world, your credit score can control many of your financial decisions and outcomes. The great news is credit scores are easy to improve with expert counsel in advance of a transaction. You may think the only thing you have to worry about is making payments on time. Although this is true, there are many other variables that go into calculating a credit score and improving upon your current credit rating.

When you are ready to consider buying or refinancing, the credit score is the foundation that determines the rate you receive. Improving your credit score is the most beneficial action a home buyer/owner can do 6-12 months before they want to buy or refinance a home.

Credit score affects all of the following:

* Buying power

* Interest rate

* Your monthly debt obligation

* Your approval from a lender/bank

Buying power refers to how much home you can afford at a set mortgage payment. The following scenario demonstrates the magnitude small differences in credit score can have with your buying power.

Let’s say home buyer Joe and home buyer Sam have both saved $15,000 for a down payment on a home. They both would like a housing payment of $1500/month. Why does Joe get approved for a $225,000 house with a conventional loan but Sam gets approved for a $250,000 home? Sam has a 720 credit score, but Joe has a 680.

That 40 point difference in credit score means that Sam, the buyer with the superior credit score, can afford over 10% more home for the same monthly payment. A lower credit score results in a higher rate. A higher rate results in a higher monthly payment. A higher monthly payment means your buying power is diminished. Sam’s buying power is $25,000 greater than Joe’s because Sam primed his credit score to achieve the best mortgage possible.

As the story above illustrates, even if you have good credit now, going from good credit to great credit can save you money and increase buying power.

As a mortgage broker based in Saint Charles, IL, one of the first things I do when I sit down with a customer is look at their current credit report. The main factors we focus on are the changes we can make to increase their credit score.

* Call your credit card company to raise your credit card limits – the more credit available to you tells future creditors that institutions are willing to lend you more money.

* Pay down credit card debt to below 21% of your limit, carrying a small balance is fine as long as you are making monthly payments on time.

* If you do not have a lengthy credit history, you can take out a personal secured loan, installment loan, or auto title loan and quickly pay it back.

* Keep the age of your credit lines long – keep accounts with a deep history. Do not close accounts even if you are not using them.

The first step to take is to utilize the tools you have available to you. Every single person has access to one free credit report per year at You have the choice to order from one of three credit reporting bureaus: Experian, Equifax, or TransUnion. This is a federally regulated website to help consumers review their credit yearly.

Go ahead and print this report, and take a long look at the addresses associated with your Social Security Number. Are they all correct? Can you identify all of the debt obligations?

Have you made all of your monthly payments on time? There are three categories of delinquent payments based on the number of days the payment is late. A 30 day and 60 day late payment harm your score, but not as much as a 90+ day late payment. A 90+ day late payment can appear on your credit report for up to 7 years. A past due payment, that goes unpaid can be sent to collections. This is a major red flag for lenders of any kind. These late payments can be a damaging mark on your report, the negative effects of a late payment diminishes over time.

The next step is to ask yourself, what you are currently paying for your debt obligations, specifically your mortgage. Would you like to pay a lower monthly amount for your mortgage payment? If you think your interest rate is too high, it likely is. Give me a call and I will work to find you a better rate.

I hope to earn your readership and an opportunity to create a complimentary plan of action to save you money.

God Bless,

Phil Bukowski

Direct: 630-254-3752

Illinois Residential Mortgage Loan Originator

NMLS: 1403277