When deciding to buy a new house, the amount of money you have in your bank account matters a lot. You must consider your finances as you plan for the type of house to have, the size of the kitchen, and the materials to be used. Taking a look at your pockets is also crucial for it determines the type of house you can afford. However, if you think your money could not provide you your dream home, then it’s probably best to start looking for the best home loan programs.
FHA Home loans are among the top choices in the market today and they can help you acquire the ideal home for your family. As you check out of the best home loan in town, it’s also good to take a close look at your credit score. Your credit score greatly determines your chance of having a home loan application approved. If you want to improve your credit score before applying for a home loan, consider knowing what credit score really is and what you can do to improve it.
Know Your Credit Score
For most mortgage loan companies, they determine your credit score by calculating it with the FICO scoring model. This score is a three-digit number that estimates your risk for credits. FICO scores range from 300 to 850, and it implies that the higher the credit score, the higher the credit capacity and your chances of getting approved.
A good credit score shows mortgage loan lenders your capacity to pay monthly financial obligations and your attitude in handling debts in general, thus it is very important to have an excellent credit history. Most private mortgage lenders require a credit score of 620 and above.
Tips On Improving Credit Scores
If ever you do not qualify for any home loan program yet, here are the tips on how you can improve your credit score.
- Pay your bills before the due date. This reflects your reliability in paying bills.
- Keep your credit card balances low for this affects your credit utilization ratio.
- Keep your unused credit cards open for the number of your credit cards can increase your credit score.
- Apply for new credit accounts only when you really need it.
- Dispute the inaccurate information in your credit reports.
How Long Will It Take To Improve Credit Score?
Do not rush in improving your credit score because there is no urgent solution for bad credit. If you have negative information in your credit reports such as overdue, bankruptcy, or too many inquiries, let time pass by to rebuild your credit. Remember, there is no shortcut in rebuilding your credit score.
If, however, you intend to get financing through an FHA home loan program, it is recommended that you check your credit score months prior to availing a home loan. This will help you have more time to improve your score.
Having a good credit score is a requirement in getting approved for most home loan programs, but if you don’t have time to build or rebuild your credit, FHA mortgage loans could be your best option. Get in touch with the leading FHA-approved lender near you today to find out how can get started on obtaining the home of your dreams.