Interested home buyers know very well that homeownership needs effort, preparation, sacrifice, and a lot of patience. The road to becoming a homeowner comes with different challenges or hurdles. Each one needs to be overcome before the milestone actually comes true.
Qualifying for a mortgage is not only limited to securing all the necessary documents needed to apply for one. You also have to prove lenders that you are capable enough of paying a mortgage back.
You need to prove them that your financial profile is worthy of an approval. This includes checking if your income, your current debt-to-income ratio, and other essential requirements.
Lenders also need to check your credit. In fact, this is a crucial factor when you apply for a mortgage. Becoming creditworthy requires a lot of work but it’s definitely doable.Let our lenders guide you.
What is considered “good credit”?
Lenders use your credit score to determine the level of risk you have as a borrower. This way, they will decide if you’re worth doing business with. Through your current credit standing, they’ll see if you are capable of paying back the money you borrowed.
Lenders commonly use credit scores from VantageScores and from Fair Isaac Corporation (FICO). These companies usually consider credit scores ranging 700 and up as good to excellent. Individuals with scores 550 and below are considered poor.
Interested homebuyers who currently have poor credit scores have to work hard to turn it for the better. While there are government-backed mortgages that have flexible guidelines, it’s still good to boost your credit and make it more satisfactory.
How do you boost your credit?
There are a number of ways to help boost your credit. These are smart habits that should be cultivated in order to become more creditworthy. Let’s count some ways to improve your score.
First, you need to be current with your bills. If you currently have late payments, it’s best to start paying them back and continue paying future bills on time. Every time you miss a due date, your credit score suffers.
Debt consolidation has its perks, too. When you decide to consolidate your debt, you’ll probably end up having reduced payments with low-interest rates. You can definitely boost your credit score if that happens.
Checking for any disputes can also boost your credit score. Credit score reports get mistakes, too. That’s why you have to be particular with the details of your report. If you spot any discrepancy, it’s possible to have it corrected.
Finally, avoid adding more debt if you’re already having a hard time paying back your current dues. There’s no point in putting yourself more at risk by increasing your debt. It will only make your credit worse.Become a homeowner today.
It’s not just for mortgage approval
Keeping good credit doesn’t just help you score a mortgage. Home buyers also have to be aware that the higher your credit score is, the better mortgage terms you can score.
Which is why it’s always a good idea to boost your credit score for the better even if you already have a good one. If you’re not careful, you might end up affecting all over again.Ask our lenders.