Things about Credit Scores That Affect Home loan Approvals
Do you want to purchase a house? Buying a house is not a luxury. It is a necessity. You should have a property on your name. You should make sure that you start saving up for the dream home you have in mind because real estate prices are soaring high with each passing day. However, it is not just possible to finance your house completely with your savings. You will need help from external sources and will need to borrow for your house from a mortgage lender. A good home loan lending site can of help. They can offer a platform to find good mortgage lenders and a variety of home mortgage programs. But what is common to all these loan programs is the eligibility factors. You have to make sure that the first and foremost thing you fulfill is the credit score requirement whenever you are applying for a loan.
Generally, a decent mortgage program would require you to have a 580 credit score. It is a standard need for several mortgage programs. So, how will you be buying a house with 580 credit score in Houston? Well, here we have discussed a few crucial things about your credit history that is always considered in your loan approval process. All you have to do is pay attention to these and your home buying experience should be a smooth sailing process. Take a look.
You should focus on the history of your payments when applying for a home loan. You must make sure that you make all the credit payments on time and clear your monthly EMIs. Not clearing them or building up the due payments are quite likely to increase your debt and affect your credit score.
Utilization of Credit
All of us have some credit power or ability. Well, lenders pay attention to how much we utilize that credit ability. Is your total debt almost utilizing the whole of your credit limit? Or is it just about 30-40% of it? If you want to increase your credit score, you have to keep this to just about 10% or below. The lenders might not approve of your loan if they see that your credit utilization is maximum.
The length of duration of your credit also affects your credit score. Some lenders consider the duration of your account and see how long have you been making these credit purchases. You should maintain your old accounts and see if it is in a good shape or not.
Type of Mortgage or Credit
The credit score will definitely vary with respect to the sort of credit you want. All your credit cards and different types of loans come under this. These have individual roles that determine the credit score. Accordingly, your credit score is calculated. You should speak to a home loan specialist to understand which type of credit would affect your score in which manner before making any changes.
So, if you are now aware of how the credit scores can play a huge role in your loan approval, start working on improving it from now.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.