Your credit score is a driving force when it comes to what mortgage program you may be eligible for, what your interest rate will be and other important factors. Many people believe that they can’t get a home due to their credit score and put off talking to a lender. At Summit Mortgage Corporation we are adamant about granting clients and borrowers sound advice when thinking about purchasing a home. Here are some common credit score myths corrected!
A Bad Credit Score Won’t Go Away
You are in total control of your credit score and whether or not it stays in the red. By paying your bills on time, staying under 30% of your credit limit and checking on your score periodically – you will see your score improve with time.
Checking Your Credit Will Hurt Your Score
There are many sites like Credit Karma where you can check your score for free without any damage being done to your rating. On the other hand, if a lender checks your credit score – that’s when you will see points taken away.
The Credit Score You Check is the Same One Your Lender Sees
The score you may have pulled from myFICO, the credit bureaus, Credit Karma, or whichever third-party was an educational credit score. These scores are provided just to give you a perspective on your credit standing. They’re not the scores that lenders actually use to approve your application.
To Improve Your Score Close Unused Credit Cards
Many people think that having an unused open line of credit is bad thing but it will end up hurting you more to close it. If that line of credit is in good standing, cut up your card and leave the account alone.
Paying Off Your Collections Helps Your Score
Even though paying off a collection account helps your overall credit story, it doesn’t necessarily immediately improve your score. Once a bill goes to collections it is featured on your report until the reporting time limit runs out.
In Order To Build Good Credit You Need to Go Into Debt
Using credit cards the right way along with time are the best ways to build a strong and sound credit score. Staying under 30% of your credit limit and making small purchases each month and paying those off will boost your score. Never create more debt than you can comfortably afford!
With A Bad Credit Score You Won’t Be Approved For Anything
Of course having a bad credit score makes things a bit more difficult when trying to get approved for a loan but that’s not all lenders look at. When evaluating creditworthiness they will also look at other factors like your income and level of debt. Even with a bad credit score you can still be approved but a higher interest rate or security deposit may be required.
Your credit doesn’t need to be a daunting thought in the back of your head restraining you from taking the next step towards purchasing a home. Rest assured, there is always a way to get your credit back on track and establish peace of mind so you can purchase that home you’ve always wanted. Just remember to keep an eye on your score and make smart and sound purchases when starting the home loan process!