Carri was eager to purchase a new home but faced a high interest rate due to her credit score of 680. With 15% available for a down payment, her goal was to improve her credit to secure a more favorable rate. She needed a strategy to raise her score quickly so she could qualify for a better rate and reduce her long-term costs.
Challenge
Carri wanted to secure a new home but faced a high interest rate of 7.875% due to a 680 credit score, despite having a 15% down payment. To qualify for a more favorable 6.99% rate, her score needed to reach 740, presenting the challenge of improving her credit within a tight timeline.
Solution
I worked with Carri to enhance her credit score by strategically paying down small balances across her accounts.
- Establish Credit Factors: Identified credit factors affecting her score and used a credit simulation to show the impact of targeted debt payments.
- Strategic Payments: Guided Carri to allocate $5k toward paying off debts rather than putting the full amount toward the down payment.
- Secure a Better Rate: We locked in the loan at 7.875% and re-scored her credit mid-process to secure a lower rate once her score improved.
Outcome
Carri’s credit score rose to 740, allowing us to lock her loan at 6.99%. This reduced her payment and made her monthly payments more affordable while also saving her thousands of dollars in interest over the loan term.