Most people know or have heard that they need to have a good credit score to buy a home, but some aren’t sure why it’s so important. While there are quite a few reasons why this is important, including finding a good lender like Chenoa Fund, we’ve listed 5 that are usually at the top of the list.
Higher Scores Show Responsibility
For starters, higher scores can show that you are responsible. This is especially true if you don’t have a lot of accounts that have late or past due payments. By showing that you pay everything on time, you’ll show potential lenders that it will be the same with them. The last thing they want to do is give you a mortgage, then end up having you default on the loan. They end up making a lot more money by having people pay their monthly amount than they do by going to court and suing you. Chances are, you won’t be getting many offers for a loan if you have a lot of bad marks on your report.
Higher Scores Give Better Rates
It can also end up giving you better rates. In the world of mortgage loans, those with fantastic credit will get better rates than those that have a few minor issues. Most people don’t realize exactly how many numbers go into calculating a mortgage payment and all of these payments are usually different from person to person. For example, someone with perfect credit might only have to pay 3% interest, while someone with some bad marks might have to pay 5%. These numbers aren’t too far off from each other, but it really adds up to a lot of extra money on each payment.
Higher Scores Give More Options
If you want to be able to compare lenders and not have to settle, you’ll want to have the highest score and best credit marks you possibly can. If your credit report shows that you’re responsible and pay everything on time, you’ll have a higher chance of having different options. For example, someone who has great credit and marks will have a higher chance of having multiple different options, while someone with minor marks and a few missed payments might only get the option to choose between 2 or 3 lenders. It’s important to have options because different lenders bring different things to the table!
Higher Scores Give Better Chances of Refinancing
For whatever reason, many people decide to refinance their mortgage at some point down the line. This could be because they lost a job and need smaller payments or they might need the extra money to do some renovations to the home. With this being the case, once you actually have the mortgage, you want to make sure you keep your credit score up. Those that have kept their credit in good standing throughout the time of the loan have a better chance at getting a refinance than someone who pretty much just stopped caring and let it slip.
Good Credit History Shows You Pay On Time
Finally, having a good credit history and score will prove to lenders that you pay on time and they’ll get their money on the date specified. Since it’s a pretty big risk for lending companies, they don’t want to take the chance of not getting their money or waiting for long periods!
As you can see, having a good credit score has some great benefits and good lenders, like Chenoa Fund, really do pay attention to them. If you want these benefits, but have less than perfect credit, it’s recommended that you bring up your score before starting any applications!