As a homebuyer unless you’re paying for a new property with cash your credit score will ultimately be a factor in the purchase process. Of course there are minimum qualifications to get a loan period, but there are also good reasons to take a close look at your credit even if you qualify. Depending on the loan product and lender a single credit point difference can make a substantial impact on the rate offered. While there are a multitude of factors that can impact credit, speaking with a reputable lender of choice early on in the process is highly recommended. Most lenders have computer simulations which can show the impact a change in a credit factor would have on a credit score. For instance, perhaps paying down a credit card balance by $200 will give you another 5 points to your credit score which drops your rate from 4.125% to 3.875%. That would absolutely be worth knowing and taking advantage of before a home purchase. Even the order which changes are made to credit can impact the score so be sure to follow any sound advice to the letter.
For buyers who are thinking about a purchase in the near future, particularly those who know they have marginal credit, it’s wise to begin the conversation with a lender immediately. Having a few months to make changes is best and won’t run the risk of not qualifying or delaying a closing. One other note is to be very cautious of “credit counselors” who advertise that they can make huge impacts in your credit score with easy fixes. More often than not these are scams that may not change your credit at all or in some cases only impart temporary modifications which will once again reappear on your credit soon after you pay the company. As always feel free to ask us for recommendations on lenders who we’ve been successful with in the past. We have multiple lenders across many companies that we’ve used and sometimes they can each offer a different spin or product.
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