How to get the lowest mortgage rates

The housing bubble has burst. Almost everyone is reeling from job losses to the credit crunch and high mortgage rates. Banks are tightening their lending rules and credit standards, however it is still possible to get low mortgage rates.

Many lenders today uses a FICO score to access and grant approvals. A good FICO score will help improve your credit rating score that will go a long way to getting a low mortgage rate for your home. FICO scores are calculated based on your rating in five general categories:

• Payment history - 35%
• Amounts owed - 30%
• Length of credit history - 15%
• New credit - 10%
• Types of credit used - 10%

A good credit score is your passport to a home, automobile, insurance and yes, a credit card. With a devastating sub-prime mortgage crisis and a credit crunch gettting tighter by the month, having a good credit score goes a long way.

Banks have been forced to write off record levels of credit debt, so things are going to get rougher. So make sure you pay your credit card bills in full every month and on time. Late payments will lower your credit score and may even trigger an automated increase in rates. Moreover, it could result in a vicious cycle of credit-card debts.

Most people tend to look for credit cards that give you tempting rewards like travel incentives, or discounts at expensive restaurants. But most of these perks are not your regular bills and payments. Unless you fly often on business trips, travel rewards are aimed at getting you to spend more. Choose credit cards that comes with discounts to your regular bills, like gas, groceries, regular payments, things that require you to pay regularly.

Never use your credit cards to pay for debt. The debt amount will just keep mounting. Many people justify indebtedness with the thought that they are making an investment when they purchase items. That's an unwise assumption. And don't apply for new credit cards you don't need.

Today's Bottom Line

If you haven't already done so, check your credit report. And make it your goal to get a good credit score.

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