Before buying a home, you must first figure out whether or not you are actually credit worthy. Naturally, the higher your credit score, the better loan you’ll get, but did you know that a low credit score can result in your inability to become a homeowner? Dean Graziosi has provided you with information that will help you answer this very important question.
So how do you know if your credit score is good enough for you to buy a home? There are several things lenders will look for when deciding whether or not to approve you for a loan. The first thing they will look at is your credit history. This will tell them how long you’ve had credit as well as your ability to pay off all your debt. If you have stayed ahead of the game, you should be fine; however, if you’ve had difficulty doing this, you may need to take some time improving it by paying off debt before applying for a loan.
Consistency with paying bills is another aspect of credit worthiness lenders also consider. If you have a history of paying them on-time, they will look favorably upon you as someone who will be more likely to make mortgage payments regularly. If, on the other hand, you have a history of not paying on-time, this will probably be seen as an ongoing difficulty that will result in you not getting a loan.
How much money you make will also be taken into account when seeking to obtain a loan. Lenders will compare the amount you pull n each month with your living expenses. These include: mortgage or rent payments, utilities, monthly grocery bills, and how much debt you have accumulated and how you’re doing with paying it off. How much you have left over once you have paid all your bills will also be taken into consideration.
The types of credit you have are also taken into account. Lenders like seeing a variety. These can include: credit cards, car loans, mortgages, and any personal or school loans you may have accumulated over the years.
The number of credit applications you have recently submitted will also make a difference. Some lenders consider this a bad sign because it looks like you may be having financial difficulties when several applications have been filled out.
If you are having trouble in any of the areas listed above, take the time to improve your credit. As an article posted on onemainfinancial.com advises, you can begin by paying off credit cards, make payments on-time, and cut expenses where you can. Once your credit is in better shape, reapply for your loan. You can read more about this and other relevant real estate topics by visiting Dean Graziosi’s blog.