What Buyers Need to Know About Credit Scores

If you’re looking to move up to your forever home, it’s probably been years since you last needed to qualify for a mortgage.

In that time it can be easy to forget some key aspects of the financing process. Your credit score is key piece of the puzzle when it comes to qualifying for the loan that will get you into your forever home. Your credit score is an indicator of your past behavior, which lenders use to look into your likelihood of making the payments on your new loan. It also helps determine your interest rate. Typically, the higher the score, the lower the rate.

With interest rates being a major factor in determining whether you can afford to move up to your forever home, your credit score is even more important.

The higher the score, the better, although at least 670 is needed for many loan types. For the lowest rates, you’ll want your score to be 740 or above. While you’re considering the move up to your forever home, take a look at your credit score on Credit Karma and Experian to get the full picture.

The simplest way to learn more about your credit situation and how it will impact moving up to your forever home is to contact a great lender. Email me for the contact information for my preferred lenders. They can take a look at your credit and give you a plan to improve your score if needed.

Key factors in the determination of your credit score are:

• Payment History: Make all of your payments on time. If you miss a payment for any reason, call your creditor and discuss getting the late fees waived and not reported on your credit report.
• Ratio of Total Debt to Available Balance: The less of your available credit you’re using, the better. Typically you’ll want your credit usage to be about 30% or less.
• Credit Applications: When you’re applying for a mortgage, don’t apply for anything else, as that can reduce your score.

With affordability challenges today, your credit score can impact whether you can afford your forever home now, or need to wait. Prioritize maximizing your credit score to get into your forever home sooner.

For more information on how to move up from your “good enough” home to your forever home, subscribe to my email series, How to Sell Your “Good Enough” Home and Move Up to Your Forever Home at the Same Time.