The 3-digit measurement called your “credit score” has a huge impact on your loan application. Try as you might, you may not get approved for a mortgage for your home for sale in Sandy Springs, GA, if your credit score falls below 650. The important thing to focus here is that we did not say “Never.” If you approach a private lender and are able to strike a deal, you will get the loan but with a high interest rate. There are consequences in both situations, which is why your best bet is to work on your credit report.
In our previous blog, “4 Simple Steps to Increase Your Credit Score”, we talked about how you could tidy up your credit score by checking your credit report, paying accounts that are overdue, using less credit, and avoiding closing any accounts. In this blog, we will discuss about why doing this is important.
If you are a high-risk borrower, the lender might ask for collateral or might give you a small loan. In both scenarios, you won’t be able to afford the type of house you are hoping for.
Understanding the Credit Score
Your credit score is divided into 5 categories. If you fall in the “Good” category, then you will be easily able to afford a home for sale in Sandy Springs, GA. Let’s have a look at the credit scores:
- Excellent Credit: 750+
- Good Credit: 700 to 749
- Fair Credit: 650 to 699
- Poor Credit: 550 to 649
- Bad Credit: 350 to 549
While it’s nearly impossible for a person with a “bad” credit core to get a loan, someone with “poor” credit score can explore financial assistance programs.
The higher the credit score, the lower the interest rate will be on the loan. This gives you the benefit of small monthly payments.
What Determines Your Credit Score
In order to find out how much you will be able to afford, you need to make sure that the following things are in order:
Late payments, negative accounts, and unpaid utility bills are the reasons behind a bad payment history.
Your credit lines having a high unpaid balance on it can lower your chances of showing yourself as a trustworthy person to the lender. Your debt should always be below 10% of your total credit line.
Don’t make delays in payments!
New Credit Inquiries
Stop opening new credit card lines because when you will apply for a loan, the lender will look into this inquiry and deem you a risky buyer. Although the effect is temporary, it does puts a pause to your home buying process.
The negative impact of co-signing is that your credit line develops discrepancies. If the other buyer does not have a clean history, he/she probably won’t be able to make the monthly payments on time. When the time comes for you to buy a house, you will have a poor credit score. So protect your credit score!
The process of applying for a loan is not that hard. It is your credit score that matters. So, make payments on time and avoid spending more than you can afford.
Need to get a home for sale in Sandy Springs, GA appraised? Head on over to America’s Network Realty Group Inc. and get a quick appraisal from the experts.