Tracking The Importance of Credit Scores
Do you track your credit score? Credit scores can help creditors determine whether to give you credit, decide the terms they offer, or the interest rate you pay. Having a high score can benefit you in many ways - especially in real estate. For example, higher scores make it easier to get a loan, rent an apartment, or lower your insurance rate. Before you jump headfirst into searching for your dream home, you need to ensure your finances are in order. First, review your credit score and determine if you need to take action to strengthen your credit.
📈 Why Your Credit Score and Report Matter When Buying or Renting a Home
As a buyer, a strong credit score and report make you a more desirable loan candidate. When deciding to approve you for a home loan, mortgage lenders take a deep dive into past car loans, student loans, credit cards, bills, and more. They also review your history of repayment and public-record information. If their findings are positive, they will be much more likely to approve you for a loan and offer lower interest rates and better terms.
💯 What Credit Score Do You Need
The credit score required for a loan depends on the type of mortgage you select, the size of your down payment, and your lender. According to QuickenLoans, most lenders require around a score of 620 or higher for a conventional mortgage with lower interest rates and flexible repayment periods. Federal Housing Administration (FHA) loans require a minimum score of 580. The rental market also carefully scrutinizes credit scores for potential tenants. Most landlords require a credit score of 620 or higher.
🆓 How to Find Your Credit Score for Free
You're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. To obtain your free report, visit Annual Credit Report
⬆️ How to Improve Your Credit
There are ways to improve your score. These include, but are not limited to, correcting payment errors on your credit report, ensuring you make all payments on time, making micropayments in between due dates, and paying down credit cards.