Buying a house can be a long and winding road of ups and downs. But being prepared and knowing the steps can help you weather the emotional storms that invariably come along.
Knowing how your credit score is calculated can be helpful to establishing a good strong score which will help you obtain a mortgage for the best rate.
The riskier you are to lend money to, the higher the rate of interest will be on that mortgage which can make the cost of the loan prohibitive.
1) Payment history, paying your bills on time makes up 35% of your score. Set an alarm in your calendar so that you do not miss any payment dates. This is the largest contributor to your credit score.
2) The amount of debt you are carrying makes up 30% of your score, too much debt will affect your score negatively, lenders want to know you can repay what you are borrowing.
3) The length of the credit you have available, those accounts you opened a long time ago and used all contribute to your score, up to 15%, so it is good to use these every now and again to pay for something small and pay it off. This also is why you do not want to close old accounts as it will negatively impact your score. Always talk to your loan officer before you close an account. It may be better to keep it open and leave the card at home.
4) Amount of new credit makes up 10% of your score, now I am not sure what they actually term "NEW" credit, but if you are constantly applying for new credit cards this is seen as a negative.
5) The mix of your credit makes up the final 10%. This is the blend of your debt, credit cards, auto loans, and mortgages a varied mix is seen as a positive, too much of any one can be a negative. Again another reason not to apply for every single credit card offered.
If you are looking to buy a Main Line or Chester County home, contact Nick Vandekar, Selling the Main Line and Chester County with Realty ONE Group Advocates, office 484-237-2055, cell or text 610-203-4543, email Nick@VandekarTeam.com, I have contacts with multiple loan officers and can definitely connect you with a lender who can help you get approved and ready to buy a home. Reach out today.
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