How To Understand And Increase Your Credit Score

Everyone dreams of one day saving up enough to buy a home, and we have to admit that the easiest way to do this is to

increase your credit score to qualify for a mortgage.

Your credit score is a vital piece of the puzzle when it comes to qualifying for a home loan. Lenders review it to gauge your payment reliability and debt repayment capacity. It even influences your mortgage rate. Discover more insights in this Bankrate article:

"...you don't need a perfect credit score to buy a house... Aiming to get your credit score in the 'Good' range (670 to 739) would be a great start towards qualifying for a mortgage. But if you're wanting to qualify for the lowest rates, try to get your score within the 'Very Good' range (740 to 799)."

FICO Scores

Gain a deeper understanding of how your credit score impacts your home loan and mortgage rate by working with a trusted lender. As FICO advises:

"While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates."

Here are some ways to improve your credit score

according to Experian:

Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.
Credit Applications: If you’re looking to buy, don’t apply for other credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.

When the time comes to dive into the homebuying process, a knowledgeable lender can evaluate your credit score range and provide tailored information about the specifics of each loan type.

Jade Kim Zivko

(216) 338-5918

jadekim40@gmail.com

source: simplifyingthemarket.com