Home Loan Determinants > Your Credit Score
As we discussed in our previous blog, there are a lot of factors that lenders weigh when determining if they will grant you a home loan and how risky this loan will be for them. As you probably assumed, credit score has everything to do with what type of interest rate your mortgage will generate, and the terms in which you receive the loan. Because it’s such an important part of the home-buying process, we’ve dedicated this blog strictly to covering the details of how credit scores affect home loans, and what you can do to prepare yourself. Just as important, secure your home with a Wright City Home Insurance policy.
Your credit score is worth its weight in gold.
The higher the credit score, the lower the interest rate. Even a small percentage less (think 1% less) can have a significant effect on how much interest you pay each month – approximately $100.
What do lenders look for?
According to Bank Rate, lenders prefer borrowers with low balances, a long history of on-time payments and a mix of credit utilization – for instance, a car loan and a couple of revolving accounts such as credit cards.
In addition, lenders want to see that you’ve established credit history, don’t try to open new accounts regularly, and that you have a decent amount of available credit in comparison to the debt you already carry.
Cleaning up your credit.
Get a detailed credit report way in advance before buying a home. This will give you an idea of where you stand, ensure all information is correct, and that there are no mistakes reported. If so, correct them immediately (you can do so online), and wait for all 3 credit bureaus to reflect this change before applying for a loan.
About Sine Insurance Group
At Sine Insurance Group, we want to ensure that your belongings and your dwelling are protected. Our custom-tailored rental insurance policies are crafted specifically to meet your needs and provide peace of mind. For more information about our products, contact us today at (636) 947-1177.