While your credit score is not the only factor considered by mortgage lenders, it plays a crucial role in determining how much you will have to put down as a deposit and how much you will pay in interest on a home. Improving your credit score will certainly aid in landing your dream home. You may also benefit from receiving a lower interest rate and a larger bank loan. A credit score is a measurement of how responsible you are with your credit.
Factors of a good credit score are broken down here:
- Payment History: Do you pay your bills on time? It is crucial to pay your bills on or before the due date; be sure to factor in things like mailing time and holidays.
- Usage of Debt: You ultimately want to work towards high limits but low debt, meaning keeping a balance of 20% or less if you don’t pay in full every month.
- Credit History: How long have you been working on establishing credit? The longer, the better.
- Account Mix: Having a variety of accounts or lines of credit open is best.
- Inquiries: Too many inquires from applying for credit cards will hurt your score. Be careful about applying for too many credit cards or lines, especially within a year prior to applying for a mortgage.
Get Your Free Annual Credit Report:
- Equifax, Experian and TransUnion are the three main credit-reporting agencies. Go to annualcreditreport.com and print out your Free Annual Credit Report or call 877-322-8228.
Investigate and correct mistakes on your report.
- If you discover a mistake on your report, get in touch with the consumer bureau and creditor immediately.
If you are working on your credit score you can monitor your credit using the free version of Quizzle.