Check your credit score before you buy
Like many first time home buyers, you are probably excited to look for your Charlotte NC home. Maybe you’ve even started looking at listings of homes, searching for homes that may fit your requirements.
Before you get too carried away planning about your dream home in Charlotte NC, one of the first things you have to do is to know your credit score. Your credit score will help you know whether you are actually qualified for a loan, and if you are, how much home you can afford.
What is a credit score?
Your credit score is a number that indicates your financial trustworthiness. It is based on your credit history. Your credit score tells lenders what type of borrower you are, if you have the ability to pay your loans, and how you manage your payments.
This three digit number plays a major role in your life.
Banks, car dealerships, and credit card companies use it to evaluate your ability to pay. Insurance firms use it in setting your rate. Landlords use it in checking to see if you can afford to make monthly payments consistently.
Some employers even use it to gauge whether to hire you or not!
Credit score runs from 200 - 850. The higher your score is, the better your rate will be.
Factors that affect your credit score
What influences your credit score rating? The following are the factors that impact a credit score.
Payment history. This refers to your previous payments for all your loans - student loan, rent, car loan, insurance, credit cards, etc. Your history reflects whether you are likely to make payments on time, or if you are always late on your payments. It also makes note of how much was left unpaid, how recent this happened, and how often it happened.
Credit utilization rate. This refers to the percentage of credit you’ve used. It is comparing the balance of the card to the amount of the credit limit. The more credit you use, the lower your credit score can be.
Number of credit accounts you have. Another factor that has a high impact on your credit score is the number of accounts you have. It also takes special consideration for the most recent accounts you’ve opened. If you are planning to get a home mortgage loan, don’t open any new accounts as that gives you more means of spending, which means another debt to be paid on your tab.
Total amount of your debts. There are different kinds of debts, and the aggregate amount will be considered when checking your credit score.
What is the average credit score for a home mortgage?
Now that you understand how credit score can affect your home mortgage loan, you may be wondering what credit score is needed to get a home mortgage loan.
Unfortunately, there is no set answer to that. Each lender has their own set of guidelines to check and follow.
There are also some other factors that are taken into consideration for the approval of your mortgage loan.
Thus, if you are planning to buy a home, it is a good idea to get your credit report so that you can evaluate your finances. You can get a free lender report each year from annualcreditreport.com.
Would you like to know if you can afford that dream home you’ve been eyeing for months? Get a free credit report, or have your credit score computed. That way, you’ll know if you can afford the payments for your dream Charlotte NC house, or if you need more time to save.
Call me, Nancy Braun, at (704) 997-3794. Allow me to help you find the right home that will fit your budget and lifestyle.