Even if you’re waiting for mortgage rates to drop before you buy a home, there’s one thing you could be doing right now to help your chances of successfully buying in the future, and that’s improving your credit score.
Your credit score plays a major role in your ability to get a mortgage, as well as your interest rate.
But how does credit score impact your ability to buy a home? Why is it important? And how can you boost your score before buying a home, and save money over the course of your loan as a result?
A recent article from realtor.com outlined frequently asked questions about credit scores, including:
- Why does your credit score matter before buying a home? Your credit score is based on your credit history, and it gives lenders a clear picture of how effectively you’ve managed credit and payments in the past. This helps them to determine how likely you are to effectively manage your mortgage payments in the future.
- How does your credit score affect your mortgage? The higher your credit score, the better you’ve managed your credit and payments, which makes it more likely for a lender to not only approve you for a mortgage, but also give you a competitive interest rate and favorable loan terms.
- How can you boost your credit score? If you want to improve your credit score before buying a home, it’s extremely important to pay all of your bills on time. In addition to making on-time payments, there are a number of steps you can take to give your score a bit of a boost before purchasing a home, like paying off debt and/or asking for a credit line increase, which will improve your credit utilization rate.