Obtaining and maintaining a good credit score will not happen by itself. It requires constant vigilance and the ability to demonstrate financial maturity over a number of years to put yourself in the best position to convince lenders you’re a low-risk candidate when it comes to larger purchases such as buying a home.
For many consumers, the path to reaching a good credit score to buy a house can be a long and difficult process with periods of financial discipline, and judicious use of credit can alternate with overdue payments and closed accounts.
One of the most significant benefits of having a good credit score is the enhanced ability to buy a home and obtain a mortgage at an affordable rate.
Depending on your overall financial picture and the type of loan product you’re interested in, a good credit score may entitle you to the kind of attractive rates that make the dream of homeownership not just possible—but readily obtainable.
A point and a half on the mortgage interest can allow you to buy a larger home with the same monthly payment or use less of your capital on down payment. In addition, a better credit score will entitle you to lower insurance rates for home and car insurance, automobile loans, credit cards, and nearly all types of credit purchases, something a lot of people don’t know.
Good Credit Scores
A 'good' credit score falls into the range of 670-739 using either the FICO score or VantageScore®, that was created exclusively by Experian®, TransUnion®, and Equifax®. If you attain this score of 670-739 you have successfully demonstrated ability to pay your debts on time and maturely manage spending.
Specifically, you've demonstrated the following:
Consistent on-time payment history
Good (low) credit utilization
Multiple types of credit (credit cards, student, auto loans, past mortgage loans all in good standing)
New credit kept to a minimum
Long credit history
As a consequence, you’re more likely to be seen by prospective lenders as a reliable candidate to make on-timepayments and therefore be approved for a mortgage, and the more likely you are to be offered or for us to negotiate a better rate for you. I’ve assisted many of my clients in improving their interest rate with their lender and it's something most people don’t understand they may be able to do.
In the next blog, we'll take a look at the options available to you as a borrower and how your credit score affects the loan options you will be offered. The options are many and varied and why we say, "shopping for your mortgage" is as important as "shopping for your home."
The good news is that there is a mortgage loan available for nearly every borrower, so check our next blog and learn about mortgages. See you there!
Disclaimer - Geni Manning Real Estate Group operate in strict conformance with the Texas Real Estate Commission (TREC) Rules and Regulations and the Texas Real Estate Licensing Act and do not provide legal or tax advice. Nothing in our blogs or website should be construed as a recommendation to act without consulting a financial, legal, and/or tax professional in your state.