Are you planning to invest in a house? Be sure to go through a series of steps before you get your dream home-buying opportunity on the track. One of the most important aspects of home buying is applying for a mortgage. When reviewing your loan application, the lenders look at your income, status of employment, and the amount of the down payment. Besides, they will also check your credit.
If you are yet to become aware, your credit score will play a vital role in determining whether or not you will qualify for a mortgage. If your credit score is good, you may also benefit from the low-interest rates offered with the mortgage. Naturally, you can save a substantial amount on regular mortgage payments when you qualify for low-interest rates. The credit score is the summary of your financial accountability. So the higher the score, the more acceptable you are to the mortgage brokers, lenders, and banks. When shopping for a mortgage, you need to have a fair score. Check it thoroughly before you apply for a mortgage and invest in new housing developments Kelowna with a relaxed mind.
Calculation of credit score
The credit score calculation is based on five aspects related to the information on the report. Each of these factors makes up a specific percentage of the credit score.
Payment history is the history of making payments towards loans, credit cards, and other accounts. If you pay regularly, you will maintain a good credit score. Missed payments also appear on the report and hurt the credit score.
Credit history shows the period for which you establish the credit. A long credit history strengthens your credit score over time and banks prefer lending to those with a well-established credit history and good payment behaviour.
Refers to how much credit you are using as against the total credit limit available on your credit card. You will maintain a good credit score with low use of credit. Lenders are more inclined to offer loans to those with low credit usage and a high credit score.
Credit check is the routine process that lenders follow when you apply for financial products.
Refers to different types of accounts like car loans and credit cards. If you have more than one account and make regular payments towards them, you will maintain a good credit score.
Your credit score is calculated based on the information present on the reports and shows the number of opened accounts, their balances, and the payment history on each one of them. Overall, a good score shows that you are a responsible borrower and qualify when buying new homes in Kelowna for sale.
How does credit score matter when you apply for a mortgage?
Your credit score may or may not show you in a preferable light to the mortgage brokers, banks, and lenders. If you want to get mortgage approval readily with preferred terms and low-interest rates, you need to establish a good credit score. Similarly, a low credit score will ruin your chances of qualifying for a mortgage, thus putting a halt to owning the dream home.
Your credit score may be low for several reasons. But before the lenders approve the mortgage, they are keen to know that you will repay the debts responsibly. If your credit report indicates a history of late payments, you will pose as a risky borrower and qualify for high-interest rates.
Ways to improve the credit score to qualify for a mortgage
One of the biggest steps in getting mortgage approval is a good credit score and a critical step to buying a home. As a buyer, you need to position yourself properly and have strong credit scores to improve your chances of qualifying for low-interest rates. You know how credit scores will impact your capacity to invest in new house developments Kelowna. So, here is how you can improve your credit score to streamline your plan of buying a home.
Pay your bills timely
One of the biggest factors for owning a home is the payment history on your credit report. So, you need to focus on this area and pay the monthly bills on time to ensure that you are in the good books of the lenders. Try to set a reminder date on your smartphone to avoid missing the date of payment.
Lessen credit usage and pay off the credit card balance
Another factor affecting your credit score is the extent of credit usage. The more you delay in paying off the credit card balance, the higher will be the credit usage. Remember to make your credit card balance at an all-time low when applying for a mortgage.
Avoid late payments
Make your credit card payments fast as late payments are likely to stay on the report for up to six years. So, the longer you leave the credit card debt unpaid, you will do more damage to your credit score.
Does your credit score look good? You need to review the report and analyse the score regularly before taking the plunge of home buying in Kelowna. Lenders and mortgage brokers are less likely to refuse a loan and offer low-interest rates when your credit score looks favourable. Are you ready to go with the virtual home buying ad and have an established good credit score? Dilworth Quality Homes Inc offers great opportunities to those seeking trailblazing homes that people love.