Your credit and a mortgage go hand in hand! Your credit is a vital component of getting a home loan! When you apply for a loan a lender is going to look at your credit and credit score.
Why does your credit matter?
Your credit and credit score reflects how you’ve handled your finances historically. While credit is always being updated it is always historical.
The credit bureaus are always reporting what happened last month, last year, or years ago.
You may have great income and even low monthly debt payments. Those are both vital! But there are many things that may drag down your credit scores.
What credit items are lenders looking at?
- Are you using credit?
- Are those revolving accounts (credit cards)?
- Are you actively paying those accounts timely?
- Are you actively keeping low balances?
- Are these accounts aged for several months, years?
Credit scores reflect how you use credit and how responsible you are being with that credit. Car loans are good trade lines. Often credit cards have a great impact on your credit score. Your score more be impacted by using more than 30% of the card limit. There are various guides on the % of the card limit that you should use, but you should actively try to keep this as low as possible.
How do I check my credit?
Well you could go to the credit bureaus directly and they should give you a free copy of your credit reports once a year.
Many consumers have begun using Credit Karma. This is not an endorsement, nor do we get compensated for dropping their name. It is just a popular choice with consumers. There are many other options besides Credit Karma.
The point is…
You should check your credit! What are people reporting about me.
Surprise! You have an old medical collection. This is very common.
How do credit scores work?
Credit scores are a mathematical equation that are ever evolving as your credit evolves. It is taking into account your payment history, collections, revolving balances, new trade lines, number of times you request new credit. These all impact your credit score. Questions? Call us or apply today for a home loan and we can give you insight into your credit situation.
What is the real deal with credit and a mortgage!
The lender wants to know ONE thing…
How big of a risk is it that you will repay the loan and be responsible enough to repay the mortgage.
The lender is already going to evaluate your income, assets (savings), and credit score. So, know what is in your credit report so you can clean things up.
Why does it matter?
When you know your credit story (history)… you know how to clean things up so you can get the best financing!
Take responsibility for your credit and land that mortgage!
Need to talk to a Mortgage Consultant about your situation? Apply Today! Call us today at 419-350-8420.