When you want to buy a home in Fort Collins, you are going to quickly realize that you will get an information overload about credit scores. There is a lot of information on the internet, both true and false, regarding credit scores and it’s important to know the most important factors of this part of your credit before you decide to buy a home.
One of the most important parts of a lenders decision as to whether or not they will allow you to get a mortgage will be your credit score. A credit score doesn’t just determine whether or not you get a loan. This credit score also determines the amount of money you may receive and the interest you will be paying on your loan.
If you have a low score, you will find a harder time getting a higher loan amount and you may have to pay more for your interest. A higher interest rate will allow you to have more options regarding your mortgage and may give you financial benefits and incentives otherwise not available to you.
When you are looking at your payment options based on your credit score from your lender, it’s important to realize the amount of savings or costs that you will accrue over the years while you pay your mortgage back. When you look at the difference between interest rates, they can seem small at first; only a 1-5% difference.
Although the numbers seem small, when you factor in a home that can cost hundreds of thousands of dollars, you are potentially looking at costs or savings in the thousands of dollars.
Because of the large difference between pricing options based on your credit score, it’s vital to realize that your credit score is based on your own financial decisions from the past. Anytime you didn’t pay a bill, claimed bankruptcy, or defaulted on other loans, they could have been negatively added to your report.
However, if you always pay loans on time and have had a good financial record, your score will be higher. You must be responsible with your credit score if you want to have the best possible savings.
If increasing your credit score is something that you want to do to get better rates and savings from your lender, you must act responsibly with your credit history. Companies sometimes try to sell misinformed people that they have secrets, tricks, or methods to increase an individual’s credit score in exchange for money. The fact of the matter is that there are no mysterious and rare methods to increase your credit score other than the old fashioned way.
The old fashioned way is referring to paying your bills when they are due, using your credit only in emergency situations, and keeping your credit cards up to date with low balances. Only after you keep your record clean for a couple of months to years will your credit score gradually begin to increase.