Applying For A Home Loan? This Is Why Your Credit Score Matters!
Does My Credit Score Affect My Home Loan ?
In most cases, people will have to take a mortgage to secure a home loan for the house of their dreams. In fact, if house pricing will increase in the near future, most people that wish to buy a home will have little options in terms of proper financing.
These being said, you should take a look at your credit score and make sure that you are eligible for most types of loans. Your finances may be in good shape and you may be, overall, in a good financial position – but a lender can deny your home loan application if your credit score is not good enough.
It goes without saying that your credit score is the most important element when it comes to the lending decisions of a bank or lender.
What Is Credit Score?
Credit score comes in the form of a document that shows the status of your previous debts. It basically shows the lender if you’ve paid back your debt on time – the credit score is based on your credit history.
Moreover, your credit score is affected by the frequency and number of loan enquiries. Also, it’s influenced by the missed and late payments. Naturally, several other financial factors will be taken into consideration by a lender when reviewing your loan application.
Why Is Credit Score Important?
You should see your credit score as very important – especially when dealing with debt payments – because it affects your borrowing power. In short, a lender will take a look at your credit score and determine whether you are worthy of a loan or not.
However, a bad credit score doesn’t mean the denial of your loan application. For example, banks will assess your credit rating when you apply for a loan and, if the credit score is favorable, you will be able to secure a mortgage with little to no issues.
On the other hand, a bad credit score may come with a loan at a higher interest rate –if the lender doesn’t deny your application.
Basically, your credit score affects your ways of obtaining finance for securing the purchase of your future home. While there are lenders that will still give you a loan even if you have a bad credit score, that loan may come with higher interest or aspects that will put you in an unfavourable position.
Still, this is somewhat for your own good as well. If you haven’t been able to pay back your debt on time, the bank assumes that your finances are not “in shape” for the loan that you applied.
In short, they make sure that you won’t get into any trouble – while ensuring that they are not taking a risk by giving you a loan.
It goes without saying that you will have a hard time obtaining finance – especially when it comes to large amounts – if your credit score is not in shape.
The Bottom Line
Simply put, credit score can be seen as your borrowing power based on how you dealt with previous debt. A bad credit score will notify the lender that they are taking a medium to high risk if they decide to provide you with a loan.
Naturally, a good credit score means that they can safely accept your loan application at a lower interest rate. It means you’ve made a good impression, so to speak, and you will be able to pay it back on time.
No matter your credit score, feel free to contact our office if you have any more questions or require certain information. Our staff will be happy to help you and even guide you through the process of finding the best lender for your needs.
So, why use Highline Lending for your home loan?
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks
With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution