Your credit is very important especially if your planning to buy a house in the near future! Discover how it affects what interest rate you pay on your mortgage. The best information on how credit and your first loan fit together you will discover below.
Whether you're buying for the first time or are looking for another home, credit is is consequential. Why do I say that? It is your credit that lenders look at first to see if you are entitled to get a loan.
Even though there are many factors that come into the equation before a decision is made, those who are in the business of loaning money look at the first time home buyers credit first before considering the other factors that would qualify you for a mortgage.
Do you have good scores? Save time, money and mistakes by understanding your credit report.
Since this is the case, interpreting all the diversities that connect to credit becomes vital to your success.
For example, your credit score is a number used to measure your ability to pay back a loan.
How does this number actually do this?
Well, lenders look very closely at this score when considering you a good candidate or not. This number is a three digit number and is usually given by the financial bureaus who evaluate your financial history.
The next question you may be wondering is what is a financial history? These financial bureaus keep track of all your bill paying routines and your borrowing habits. They simulate a report that reflects all these routines. But that is not all that they track. They also keep track of how often you are late and any collections or judgments. Unfortunately, unpaid medical bills they keep a history on as well.
So when a lender says they're checking your credit, they are really checking your credit history and that three digit number. Now that your understand what your credit history is, you may be wondering what will happen if you don't have any first time home buyer credit history? That means you will have difficulty obtaining any borrowed funds. Thus establishing a history should be your first priority if you want to buy a home.
There are three credit reporting agencies that collect data about you and your credit history from public records, your creditors and other reliable sources. Then they make your history accessible by means of a report to those you're applying to for credit.
Each agency assigns a three digit number to evaluate your credit worthiness. The assigning of this number or credit scoring is a method that allows lenders to quickly and objectively assess the first time home buyer credit risk of a loan applicant.
Most lenders will use the middle score of the three scores they obtain from the credit reporting agencies to base their decision on. Thus a good credit score can do a lot for your loan options.
Mostly, how you pay your bills affects your credit rating. If you are 30 days late on many of your bills you will get a lower score. So paying your bills on time is very important. But there are some other things that can affect your rating like too many credit inquiries.
You see, every time you apply for credit a credit profile is sent about you to the creditor to look at your credit reputation. A record is kept for each of these inquiries and is also reported on your credit report. Too many of these inquiries sends a red flag to lenders. So don't go crazy on applying for a loan by applying everywhere you can, that can hurt your score.
Once the lender obtains a copy of your credit profile, they often give your file a credit grade.
Interestingly it's just like school, your file is given an A, B, C, or D depending on your credit score. That helps the lender decide what type of loan their going to offer you. Different loan programs work better with different grades.
Yes you can get a copy of your credit scores!! Once a year you can get a copy of your credit report for free. You can also obtain a copy if you are turned down for credit. So take advantage of that!
If you discover your scores are not very good then you need to take action to improve your credit. Perhaps you need to get credit and debt counseling to improve things. Maybe that won't work for you and you want to repair your credit yourself. You CAN do it yourself!!
What if I have declared bankruptcy, can I get credit after bankruptcy? Yes it is possible but there are things you must do. Below there is a link that will help you with that too.
Yes, lenders look at other credit factors besides your credit score and credit profile before deciding whether to approve your mortgage. They take a look at employment history, income stability, and many other things before making that decision.
As you can see, first time home buyer credit is very important. It is one of the first things you should investigate before you even look for a home. Click on all the links below so you can get a full understanding of your first time home buyer credit.
Credit Score - What is it teaches about the credit score and what risk factors affect it.
Good Credit History explains what to do to improve your first time home buyer credit and what to do if you haven't established credit yet.
Big 3 Credit Reporting Agencies list the three major credit bureaus and how to get a hold of them for your credit report.
What is a Middle Score explains how the lenders figure your middle score and how it affects your loan options.
What is a Good Credit Score helps you to understand what is a good score. Many want to understand this so they have something to reach for when working on their history.
Credit Scoring and Your Credit Report gives an explanation of how they come up with that three digit number.
Know the Score About Your Credit Rating will help you understand what this is and how it works.
Credit Inquiries has lots of information on what these are and what to do if they are affecting you.
Credit Profile has many things in this file. Find out what is included and what is not.
Credit Grades is another term used in the industry. Learn what this term means and how it affects you.
Free Credit Scores shows you how to get your free report and why its important to have one.
Improve Your Credit has several suggestions on how to be successful in improving your first time home buyer credit.
Credit and Debt Counseling gives advice on whether you may need some outside help or not.
Rebuild Credit After Bankruptcy show that is possible and how long does it take.
Other Credit Factors That Lenders Consider gives you all the other things that are looked at when considering you for a mortgage.
Credit Score FAQ is a awesome question and answer area where you can find commonly asked questions about your score.
Oct 08, 19 08:33 AM
Hello, I have a question regarding USDA vs. FHA home loans. I am in the process of getting a home in the next month but was told I wouldn't be approved
Aug 05, 19 10:44 PM
Hi Help please! I am a first time home buyer, buying a home with my fiance'. He is selling his home currently on the market for $125K with no contingencies.
Apr 15, 19 12:36 PM
When buying a home out of state, should we wait for employment contracts? Or can we use our current state's bank? Find the answers here.
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