Need to increase your credit rating to get a better mortgage rate? This is how a woman did it.

A good credit rating can award you the home of your dreams without a nightmare mortgage.

Generally, a higher credit score will earn you a lower interest rate from most lenders.

Mortgage providers tend to view a credit score above 700 as ideal. But get your score anywhere in the 620-850 range can save you tens of thousands of dollars in interest over the life of a 30-year fixed mortgage, according to bankrate.com.

Cents cautious Founder Carrie S. Nicholson got a score of 720 which allowed her and her husband Ryan, 31, to buy their first home with an affordable mortgage rate.

Nicholson, 34, increased his credit score by 100 points in less than a year. Here is how she did it.

Request a credit line increase

When Nicholson began to consider buying a home in January, she was disappointed to see her credit score hovering around 600. The score was good, she recalls, but not ideal.

“I had credit card debt there, a personal loan and a car loan – so it was a good mix of different types of credit, which I found was a good thing,” he said. she said about her credit report.

But she debt to income ratio (DTI) – the amount of debt she owed compared to the income she brought in – wasn’t quite where she wanted it. “It was high enough that some mortgages didn’t give us the budget we were looking for,” says Nicholson.

She says the main problem was that she credit card balances were slightly above the recommended threshold of 30 percent.

There were two ways for her to fix her DTI: 1) Pay off as much of the existing debt as possible with savings and 2) request an increase in the line of credit.

Nicholson did a combination of the two.

On credit cards that were at max or over 30% balance, she asked for an increase in the line of credit. She says these requests can usually be made online or over the phone with customer service.

Nicholson says she also used the savings to pay off some debts.

“I paid off part of the debt [cards] where I couldn’t get an increase in the line of credit, ”she explains.

Proceed with caution. Requests for an increase in the line of credit will prompt the credit card companies to initiate serious investigations into your account, which will result in a small temporary drop in your score, Nicholson warned. But she says your score will rebound soon.

Sometimes these requests can lower your credit limit, Nicholson adds.

For both of these reasons, she says, it’s best to space out requests to keep an eye on things.

“I did it over a period of a month or two, and I made sure to stretch it out so that it wasn’t like ding-ding-ding and I smashed my credit all at once” , she explains.

Pause request for new credit

While Nicholson worked to improve her credit rating, she took a break from applying for new credit until her home was purchased.

Since the application for new credit cards and new loans opens up a thorough investigation into your credit report, it could have lowered her credit rating.

“I wanted to assure the bank that we weren’t going to be a risk and that we weren’t reorganizing our finances and that we weren’t looking unstable,” she says.

View a payment history on time

Pay off debts on time is the most reliable way to maintain a good credit rating, says Nicholson.

The small business owner already had a long tradition of paying her debts on time, which she said contributed to her high score.

“It was really good to prove that I had a long history of paying bills on time, that my business was really safe, and that the mortgage company was willing to give us a loan of $ 275,000 in order to buy this house. ” she says.

Establish a good relationship with a lender

Having a good relationship with the bank where you intend to apply for a mortgage will also help you get a good interest rate, says Nicholson. If the bank finds that you have a history of paying off debts with them, she says, they are more likely to get you a good deal.

“Having a relationship or being a long-time customer can really prove that you’ve been around for a while, that you’ve used their services and that you’re a great customer,” she says, “but then, too, you will be able to ask questions, and they can trust you, you can trust them.

Check your credit score at all three credit bureaus

Before you go looking for a mortgage, be sure to check your credit rating with all three credit bureaus: Equifax, Experian, and TransUnion, as each agency may give you a different rating.

“What I discovered during this whole process is that different banks and different mortgage companies check different credit districts, so it’s good to know that,” says Nicholson.

She says offices can make mistakes too, so it’s important to check your report for errors.

Be patient

After just six months, Nicholson was surprised to see her credit score climb to 720. She says it happened much sooner than she expected.

“It shows how much you can accomplish when you really focus on a specific financial goal,” she says.

Nicholson and her husband closed their four-bedroom home in Colorado Springs, Colorado in July. She uses one of the bedrooms as a home office, she says, which has a lovely view of the mountains.

“It’s awesome,” says Nicholson. “It’s my favorite thing.”

How to improve your credit score:

  • Request a credit line increase: Asking for a credit line increase on credit cards with high balances can increase your score. But be careful: it’s best to space these requests out, as they will create a temporary drop in your score. Sometimes these requests can cause your credit limit to decrease. If you can, use the savings to pay off credit card debt that you can’t get a raise for.
  • Suspend the request for new credit: Do not apply for any new loans or credits until your home is purchased, as this will open up serious inquiries on your credit report. It can lower your score.
  • View a payment history on time: Showing a long history of paying your debts on time is the most reliable way to maintain a good credit rating.

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