Having a good knowledge about your credit score and the contents of your credit report is very important since you are able to clearly understand the factors that may impact your score when getting a mortgage to buy a home. With the report, you get an overview of the things you are doing right and the parts you should change so that you can increase your credit score.
Factors that determine your credit score
Your credit including a mortgage, car loans, store credit cards, and a mortgage affect your credit score. Additionally, the credit that you are using affects your score. In this case too much use of the available credit reduces your credit score. The third factor is late repayment since it stays in the report for a lot of time. Sometimes there can be some error in the credit report but this can be fixed within a day. Therefore, before going to a lender for a mortgage, you need to ensure that the report is up to date. If you discover an error, file a dispute with the credit bureau or a creditor so that it can be promptly corrected.
Why is a Credit Score Important
A credit score is important since it impacts your chances of getting approval for a mortgage. This is very important if you are thinking about buying a home since your score will directly impact your eligibility. The second reason why a credit score is important is that it directly impacts your interest rate. High credit score, reduces the interest rate and vice versa. Since your score is intended to show if you are able to repay debts, mortgage providers want to be sure that you will pay back in full. With this, they can be able to increase the interest rate, or completely deny you the mortgage. This shows that by the end of the day, you may not be able to purchase your dream home.
How to take control of your credit score
If you get your credit score without your credit report, you will be like a student getting a test grade without getting back the actual test. You need to ensure that you deeply scrutinize the credit report so that you can know what is impacting your score. There are sites you can use to get report and use the information to determine the things that affected your score and from there you can take the necessary steps to maintain and improve them.
