You’re ready to buy a house, but you’re not sure if your credit score is where it should be for the best end result.
A low credit score can result in not getting a loan or in the mortgage rate being higher than you would like. A low score can mean a larger down payment is required along with a larger monthly payment.
On the other hand, a high credit score means a lower mortgage rate, a lower down payment, a lower payment and a happier buyer.
Prior to buying a home, check your credit report to see where you stand. Lenders will be looking to ensure you pay your bills on time, and that you don’t owe more than you can afford. Lenders want buyers who will be able to make their mortgage payments on time and in full.
If your score is low, read your report to discover why. If you have too much credit card debt, work on paying it off in the months prior to buying a home. Check for errors on your report and dispute them if you find anything that shows up incorrectly. A disputed account will hold up your home loan until everything is cleared up.
Don’t take out any new loans in the moths leading up to your home purchase. That new car that you just have to have can wait. In addition, don’t take out new credit cards. This holds true even in the days leading up to closing, so don’t make any last minute purchases on credit.
Start planning your home purchase early. If your credit score is low, a year in advance may be necessary to give it the boost you need. You’ll be a happy home buyer in the end and have a great credit score too.