|How important is my Credit History?
When a lender looks at your overall financial profile, your
credit rating is an important consideration in qualifying for
a home mortgage. If you have a history of paying your monthly
obligations on time, that's a signal to a lender that you are
likely to make your monthly mortgage payments on time as well.
So your credit or "FICO" score can be a factor in
the kind of mortgage program you may qualify for.
Your credit history can also affect the amount required for
a down payment, the amount of money you can borrow in relation
to your income, or even the interest rate you are offered. But
keep in mind that even if you have no established credit history
or less-than-perfect credit, there are still loan programs that
can help you buy a home.
If you haven't done it already, my
Mortgage specalist can help you get a copy of your credit report.
And here are some steps you can take to establish or improve your
- If you've always paid cash or used checks to make purchases
and haven't established a credit record, it's a good idea to do
so before you buy a home. You can use credit to purchase low-priced
items, make one or two prompt minimum payments and then pay off
- Some loan program guidelines allow "alternative" credit records.
If you have a limited credit history, your paid receipts and canceled
checks for rent and utility payments can help you document a pattern
of paying your monthly obligations on time.
- If you already have outstanding loans or credit card debts,
try to pay off as many as possible. The amount of monthly debt
you are responsible for paying reduces the amount of money mortgage
underwriting guidelines will allow you to spend on housing each
- Did you know that even if you are a consistent, on-time bill
payer, you can damage your credit rating if you have a lot of
credit cards with large credit lines? Even if you don't use certain
cards, or the full amount of your credit line on others, just
having them can lower your credit score! You may want to close
some accounts before you apply for your mortgage.
See tips on shopping for a mortgage!
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