Okay, so let’s all agree that nothing is easily attainable and everything needs hard work to be done. That’s how life goes on, do we agree on this? Let’s start and get along with the rest.
Same as checking your petrol gauge, oil, and car tires before getting on a long trip, you need also to check the credit score in order to buy a house which is a longer and even harder trip if it’s up to me to say.
But first before we hitting the road on this trip, what’s a enough for buying a house? Is this fuel enough to get me where I’m going?
It’s a score that measures the worthiness for each person according to a lot of information.
Upon the the scoring creditors and official lenders like banks or financing institutions determine the potential risk of lending money to a certain consumer. Lenders exploit the it also to define the right person qualified for a loan, the right suitable interest rate for him, and limits.
Credit reports in USA is mainly based on information issued from three main scoring bureaus which are: Experian, TransUnion, and Equifax. Each bureau has its own method for setting the result for each and every person based on a number of risk factors.
Which is good for getting a house?
The range in most bureaus ranges between 300 which is the lowest figure means that this person is not eligible for receiving a loan, and 850 which indicates that its holder is the perfect person for receiving a loan.
The calculation process is based on 5 factors: past payment history, amounts owed, length of time with a certain loan, new loan deals, and types of deals. The higher you get the lower your interest rate will be.
Private lenders nowadays require a minimum result of 620 in order to offer house loans (The Federal Housing Authority requires result of 580).
What if you have lower score than needed? Then you will need to work on it by getting bigger cash flow on formidable basis to pay your bills in order to get better payment history. Plus, another handy trick, try to tighten your belt a little bit and keep an eye on your expenses. That’s all this would do to buy a home.
The main purpose behind setting the good credit score is avoiding default, so don’t complain about your it, you just work on gaining money and building better history in order to be eligible for receiving a house loan.