- 1). Pull a copy of your credit report. Visit Annual Credit Report (see Resources) to get a free copy. Also, pay for your FICO score. This will give you a full perspective on your credit standing. Excellent FICO scores are those above 720; poor scores are below 600.
- 2). Calculate your debt-to-income ratio (DIR). This is the calculation mortgage lenders use to determine your ability to repay a mortgage loan. To find your DIR, divide the sum of all monthly bills (that appear on your credit report) by your total gross income. Multiply this result by 100. Excellent DIRs are below 40 percent.
- 3). Circle all positive aspects of your credit report. This includes positive payment history on all accounts, but especially on secured loans, a lack of public records or bankruptcies and long credit history.
- 4). Collect several loan offers before approaching any individual loan officer about a lower rate. The best tool you have to negotiate is leverage. The more options you can present to a loan officer, the more she will fight for your business.
- 5). Bring your credit report (notated) and income documents in for a meeting with your loan officers. Present the positive attributes that you found. Gently remind all loan officers that you have the standing to choose to finance elsewhere. Ask for at least a 1-percent rate reduction.
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