If your credit score is low, then you won’t get the best mortgage rate – and that means you will pay more money over the term of your mortgage.
Why does your credit score matter to lenders? Your score is used to determine if you are creditworthy, and your score is an important factor in determining the interest rate you pay on your loan. Simply put, lenders want to make a loan to those individuals who have a record of making on time payments to creditors.
When reviewing your credit, most lenders are looking at outstanding debt, outstanding debt relative to the total available debt, length of credit history, and opening of new credit accounts.
There are different types of loans available, and each loan has its own set of requirements. But, generally, a score of 700 or higher can get you a pretty good deal on your interest rate.
So, remember, when shopping around for a home mortgage, the higher your credit score, the better deal you can get. Do your homework as to what each lender requires and take the time to proactively improve your credit score. You can do this by signing up with solutions like RentReporters to have your on time rent payments reported to TransUnion.
For more information on RentReporters, visit here.