Where Are You Now?(Part 2): Preparing Credit

If you have saved enough cash to make a home purchase, congratulations, that’s a fantastic position to be in! However, most buyers will need to get a loan in order to buy a house. This loan, a mortgage, basically designates the house itself as collateral and therefore if the payments cannot be made, the house is reclaimed and your credit suffers drastically. Before applying for a loan, here are some things to consider and pay attention to within your finances.

1.Credit Rating:

This is one of the most important things the lender will look at. They look at your credit history and rating. Because of this, even if you have a great record, you need to double check and make sure there’s nothing in your credit history that could be hurting your credit rating. This rating is important, because it affects the different types of loans you can get. The higher the score, the more preferred loans and lower interest rates become available.

2. Amount of Credit

With this, lenders look at how much credit you have had over your adult life. This includes using credit cars to finance cars, buy houses, or purchase furniture. This way they can get a good picture of your repayment behavior. People who don’t have any credit history are often referred to as credit invisible because lenders cannot see how they would pay. 

3. Other Means of Credibility:

Fortunately, lenders are now using other means of determining repayment reliability from things such as lease payments, rental payments, utility bills and other forms of payment to determine credibility if they can’t get it from your credit.

4. Take Action

Overall, the more you can show credit performance and worthiness, the better off you will be when getting a loan. If you do find issues with your credit, you may want to consider contacting the credit bureaus or getting help addressing these to increase your attractiveness as a borrower. If you don’t really have a repayment history, you may want to consider getting a credit card, using it for existing expenses, and paying it off each month to help increase your credit.

If you have any questions regarding the nature of loans or how to find your credit history, please feel free to contact me, Chris Byrd at chrisbyrd.c21@gmail.com or (864)804-9210.