Your credit plays a key role when you want to buy your house. If you have good credit, your stand a much better chance of getting qualified for financing increases Having good credit indicates to the financing people that you are more likely to make timely payments on your financing, so they will approve the financing.
A good credit score also gets you a lower rate which can result in saving your thousands of dollars over the duration of financing. However, you cannot obtain good credit score without first establishing credit. By getting a couple of credit cards and making payments on time demonstrates to the financing company that you are able to manage your money and credit wisely, so they will most likely grant you the financing to buy your home.
If you’re going to pay all-cash for your new home, you don’t need to worry about your credit history or score as you don’t need financing. But if you are like most of us who have some downpayment (5-10% of the price of the house), but need financing to pay the rest, then your credit score is going to play a major role. Your credit score is important, as it lets the financing company see at a glance how you’ve handled money and loans in the past. The higher your credit score, you’ll get better the terms on your financing. Your credit history plays a significant role in determining your credit score, a three-digit number ranging from 300 to 850. Your payment history has the biggest impact on your score, accounting for 35% of the total score. That makes sense, as the financing company may hesitate to let someone who misses payments or pays late. On the other hand, if you have a very short credit history or don’t have one at all, the financing company have no way of knowing whether you’ll pay for your financing as agreed or if you would not pay them back. As such, they would decline the financing for you. So it is vital that you have a good credit history and a good credit score in order to qualify for financing, and get the lowest rates. Worried that your credit is not good? Not to worry. When you buy your home with OwnerFinance, we will work on your credit report to improve your scores and get you the financing you deserve.
There are five main factors that are used to calculate your credit score.
- Your payment history (do you pay on time?) accounts for 35% of your score;
- Your credit utilization accounts for 30%
- The length of your credit history
- Time length of your accounts for 15% (a downer for younger borrowers).
- Your credit mix and new credit applications each count for 10% each. The trickiest concept here is credit utilization—which reflects how much of your available credit you’re using on each credit card, and overall.
Need help in improving your credit score? We can help.
Questions? We Love Questions!
Contact: Amin Shah
Shahclan Boston – OwnerFinance
Boston, MA – USA
Phone 617-787-5151 (Landline)