Are you thinking about getting a home? If you are getting ready for that big home purchase, then you probably need to get started on applying for a home loan now.
Just like in any loan application, you have to know that your credit score can greatly affect whether you are to be approved or denied for the amount you are requesting, in this case, your home mortgage loan.
Your prospective lenders will be very particular about your credit rating, as this can inform them right away if you have the ability to pay off whatever you will be getting for your home loan.
What exactly are the activities that you do that affect your credit score? If you have credit cards, your promptness in paying for your monthly dues can have an impact on that rating.
Your card limit can also tell a lot about the kind of spender you are. Aside from that, existing loans you have acquired from other lenders or financial institutions will elicit changes to your credit score, depending on how religiously you pay your dues to those loans as well.
Now, let’s say you have more than one credit card, and you missed out on paying the monthly balance for several months now, you are at risk of damaging your reputable credit rating.
Another instance is if you have defaulted on a loan that you took out several months ago. You may wind up having bad credit. Bad credit can mean that you will no longer be eligible or readily approved by a lender or lender in case you are applying for another loan. If you want to purchase a house, then you might not be able to easily get a home loan with that kind of lower credit score.
Persons with bad credit scores can still get a home loan, as there are private lenders who offer these kinds of services. However, since you already have an unsatisfactory record when it comes to making payments, you may be quoted a higher mortgage rate on your loan, as opposed to persons with good credit rating.
If you think you are nearing that point when your credit rating can be severely damaged by your debts, then try to start paying them in the soonest time possible. You can improve your credit score and get a low mortgage rate from your lender this way.
Document carefully all your expenses, and contact your credit card issuer to determine a flexible method of payment that can benefit you both. You may also ask a friend or relative to co-sign a loan for you, just so you can get on the right track to repairing your credit.
Once you have paid off your other credit card bills, you can request the issuer to cancel the other cards, so you only end up with one. This helps you establish a better credit line, and you will be able to better monitor your expenses.
Remember it is up to you how you want you credit scores to turn out, so start making those wise decisions now. Soon, you can say hello to that house you’ve always wanted.