What You Need to Know About Your Credit Score

What You Need to Know About Your Credit Score

While so much depends on your personal credit score, especially when buying a home in Cincinnati and surrounding areas, few home buyers fully understand how it works and what it means. Home buyers should check credit scores when considering a new home purchase because lenders will always reference this numerical marker to determine how much you can borrow.  Your credit score provides a snapshot of how you utilize credit and have handled accounts in the past. Lenders use this to make sure no errors or bad marks show up.  It’s like an indicator of trustworthiness in the financial world. Without a decent score it may be difficult to secure the necessary funding for a new custom home, renovations to your home, or re-financing opportunities. 

 

Your Credit Score is Your Own

Young buyers who are just getting married should be especially mindful of their own individual credit scores which are tabulated separately from one another. Having the conversation with your beloved about credit history may feel daunting but it is important to know what each of you is bringing to the table and how your credit scores measure up. Being late on car payments will only hurt the person whose name is on the loan, even if you’re married. Keeping separate accounts helps to keep catastrophic illness or job loss from forcing the other person to become liable for financial restitution. Joining a mortgage as a married couple can help credit scores especially if one is lower than the other and boost the probability of getting the loan.

 

Opening New Accounts

Opening up a new account for credit can be problematic if a person is cleared for a mortgage. It is best not to buy big ticket items like furniture or an automobile right before trying to obtain a mortgage. Waiting until the house mortgage is closed will help keep your credit score aloft so that the other big credit items won’t impact your mortgage approval.

 

Closing Accounts

It is generally best not to close out accounts since those show a credit history. Closing accounts may work against people in that it eliminates a good payment record and makes it harder to secure credit. When trying to rebuild or improve a score for mortgages, credit cards can help if payments are on time and balances are not too high.

 

Credit Cards

The ideal number of cards is 3-5 per person and with a reasonable balance that is paid off every month. Revolving credit on too many cards can make potential credit lenders nervous about spending habits. Never allow balances of active cards to get above 30 percent of available credit. Paying the minimum or more on time is always the best option when dealing with credit scores.

 

Working on these factors and maintaining good standing with your credit accounts can help maintain a positive credit score which will be a good way to show potential lenders things are looking good on the prospective buyer’s end as far as good spending habits go. It’s always a good idea to consult your credit score, and a banker, before making decisions on your dream home so that you know what your budget will be before going into the design and selection process.

 

If you’re ready to build the custom home of your dreams, call the experts here at Brookstone Homes. We’re ready to help you discern the health and capacity of your credit score so we can help you achieve your goals of beautiful custom home ownership.

Call us to find out how to get started!