If you’ve been considering the purchase of a new home, but you have been holding back because you have poor credit, there is some good news. You may still be able to qualify for a home mortgage.
Even though a good credit score will typically allow borrowers to secure a lower interest rate, having a low score doesn’t mean that all lenders will turn you down. In fact, there are many banks and other lenders that will work with you and provide various options.
So what exactly is a good or a poor credit score?
Credit scores can range from a low of 300 up to a high of 850. In most cases, an individual whose credit score is 700 or above will be considered good.
There are several parameters by which credit scores are based, such as:
- Payment history (i.e., whether or not you pay your bills on time)
- The amount of credit in use
- The type of credit you have in use (for instance, vehicle loans, business loans, and / or credit card balances)
- Credit history (in other words, how long have you held credit cards and / or loan balances that you are paying on)
With that in mind, there are ways that you can work to raise your credit score. These can include paying bills on time (and in full), and paying down large balances like credit card debt. It can also be helpful to regularly review your credit report for any errors. Every year, you are allowed to view your credit report for free from all three of the big credit bureaus – Equifax, Experian, and TransUnion. You can do this by visiting: www.annualcreditreport.com.
While it may take a bit more legwork, owning your own home isn’t impossible, despite what many people might believe. If you’re in the market for a house or condo, we can help. Just give us a call and we’ll walk you through the process so that you know exactly what to anticipate.