How Credit Scores Impact Buying Real Estate

How Credit Scores Impact Buying Real Estate

When you start to think about buying a home, the first thing that you should do is check your credit scores. Many people don't realize how credit scores impact you in real estate. According to experts like a real estate lawyer CT lenders have been tightening their requirements in the last couple of years and have been less likely to give mortgages to people who don't have a high credit score.

Your credit score is what lenders will use to determine whether or not you're going to be a risk. If you have a high credit score that shows a lender that you pay your bills on time and that you are responsible with your money and makes it much more likely that you will get approved for a mortgage. Having a good credit score also means that you will be offered a better interest rate for your home loan. Having a lower interest rate can save you thousands of dollars each year in interest. Over the course of a traditional 30 year fixed mortgage, you could save tens of thousands of dollars by qualifying for a lower interest rate.

That's why a real estate lawyer CT will always tell potential home buyers to work on fixing their credit before they apply for a home loan. The better your credit is, the more money you will save in the long run. Traditionally lenders like to see a credit score of 700 or higher to qualify for the lowest interest rates.

Fixing Your Credit

The first step in fixing your credit before buying a home is to get a copy of all three of your credit reports from the major credit bureaus. You can get one copy of each for free once a year. Don't rely on the credit score that websites like Credit Karma give you because those are not the scores that the lenders will look at. Pull your actual credit reports to find out what your score is right now. If you are having trouble getting your credit scores, a real estate lawyer CT can help you get official copies of your credit reports.

After you have your credit reports study them carefully and make a note of any incorrect entries that are listed, you can challenge these entries to try and have them removed. If everything that is on the credit report is accurate and you have items in collections the best thing that you can do is try to work out a deal with your creditors to pay off the debts and get them off your credit report. A consumer credit specialist or an attorney that specializes in consumer debt can help you negotiate with your creditors to get those items off of your credit report as quickly as possible.

The next thing to do is use your credit responsibly. If possible, use your credit cars for items like groceries and household items regularly and then pay off the balances each month. If you can't pay off the entire balance, keep the balance on each card under 10% of the credit limit. That will raise your credit score and help you build a solid credit history.

Buying Your First Home

Buying a home is the biggest purchase you will ever make. If you don't have excellent credit, it's worth putting off the purchase of a home until you can raise your credit score and get the best possible interest rate on your home loan. Fixing your credit will save you tens of thousands of dollars and enable you to work with a reputable lender when you are ready to buy a home. Ask a real estate lawyer CT if you have questions about your credit and buying your first home.

Law Office of Chris Albanese
May 22, 2019