There is a new “buzzword” in the mortgage industry. Actually, it’s two buzzwords: Credit Scoring.
In their never ending search to find an easier way to rate a person’s financial ability, mortgage companies are using a new system called credit scoring (Also called “beacon” scores).
How Lenders Use It
When lenders pull up your credit report, they can look at all of the debts that you have, how much you owe, how well you make your payments, and many other things like if you’ve had any bankruptcies within the last several years.
This credit score is a number that lenders use to decide which types of loans that you will be able to get.
With your credit report, lenders now get a “credit score” which takes all of this information and creates a “credit score” for you.
This credit score is a number that lenders use to decide which types of loans that you will be able to get and be eligible for.
As with all new things, there is controversy over these credit scores. Some types of loans require that you have a certain credit score to get the loan – no exceptions.
And credit scores change over time. As a matter of fact, just applying for credit can lower your credit score.
How to Protect Your Score
Now that you know what a credit score is, here’s how to make sure you have the best one possible…
First of all, don’t apply for any new credit cards or consumer loans.
Don’t go down to the furniture store and take them up on the “No interest, no payments, no nothin’ for one year” financing program — and of all things, don’t go out and finance a car!
You can do all of these things after you buy your house and get your mortgage, but for your own sake, don’t do it before. Buying things on credit not only hurts your credit score, but it also leaves less money for you to use for a house payment.
Lenders look at this figure also to determine how much money they will lend you, and how much they will charge you to lend it.
So wait until after you’ve bought your home and moved in to get that new couch or big screen T.V.
And there is another reason to wait…
After you buy your home, you can get a loan for up to 125% of your home’s value to buy whatever you want.
And when you get a loan against your home, all of the interest you pay could be tax-deductible if you set it up properly!
Summary: Protecting Your Credit Score
- ✅ Understand that applying for credit lowers your score
- ✅ Do not open new credit cards before buying
- ✅ Say “no” to furniture store financing offers
- ✅ Do not finance a car before the house
- ✅ Wait until you move in to make big purchases
By keeping your credit report clean during the home buying process, you ensure you get the best possible loan terms.
Want early access to serious buyers?
If you’re going to be moving in the next six months, what you might not realize is that there are a significant number of buyers searching for homes like yours.
In fact, for every buyer actively viewing homes right now, there are 5-10 more about to begin their search, or eagerly waiting for the perfect property to come up.
If you’re interested in getting a head start on finding a buyer for your home, leave us some details below… We’ll see if we can find a match!
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We can prepare a detailed Pin-Point Price Analysis for you that shows the most current market activity in your area for homes like yours, and we can recommend an optimal marketing price range that will give you the best odds of selling quickly – and for top dollar!