Why You Should Have Good Credit Score When Buying A Home
How Your Credit Score Can Affect The Purchase Of Your Home
A credit score is what lenders use to determine how likely you are to pay back a loan. Having higher credit score allows you to borrow money comfortably, while those who have low credit score are limited on how much they can borrow, or if they can borrow at all, with higher interest rate.
Banks, landlords and insurance companies always base on your credit score to determine the type of credit card that you can get approved for - whether you are the fit for an apartment or home, and your insurance rate, among other things.
Here are the factors used to calculate your credit score:
- Bill payment history
- Length of credit history
- Unpaid debt
- Available credit you’re using
- New credit requests
- If you have had history of debt sent to collection, foreclosure, or a bankruptcy
Although the amount of money you make does not affect your credit score, you have to take note that you should only borrow the amount you can afford to pay back. Other aspects that do not affect your credit score are your age, where you live, race, ethnicity, and gender.
If you are planning on buying a home, you should start improving your credit score. Tackle your credit card debt and pay at least the minimum monthly payment. Paying a little bit more over the minimum can also lessen interest over time. Being aware of your credit score and maintaining healthy habits is crucial to having a good credit history.