How Your Credit Score Affects Your Durham Region House Purchase

How Your Credit Report and Credit Scoring Can Affect Your Ability To Buy A Home in Durham Region

Here's How Your Credit Score Will Affect How Much House You'll Be Able To Buy...

There is a "buzzword" in the mortgage industry.

Actually, its two buzzwords: Credit Scoring.

In their never ending search to find an easier way to rate a person’s financial ability, mortgage companies are using a system called credit scoring (Also called "FICO" scores or “BEACON” scores – I won’t even tell you what that means).

When lenders pull up your credit report, they can look at all of the debts that you have, how much you owe, how well you make your payments, and many other things like if you’ve had any bankruptcies within the last several years.

With your credit report, lenders now get a "credit score" which takes all of this information and creates a "credit score" for you. This credit score is a number that lenders use to decide which types of loans that you will be able to get and be eligible for.

As with all things, there is controversy over these credit scores.

Some types of loans require that you have a certain credit score to get the loan – no exceptions. And credit scores change over time. As a matter of fact, just applying for credit can lower your credit score.

Now that you know what a credit score is, here’s how to make sure you have the best one possible…

First of all, don’t apply for any new credit cards or consumer loans.

Don’t go down to the furniture store and take them up on the "No interest, no payments, no nothing for one year" financing program -- and of all things, don’t go out and finance a car!

You can do all of these things after you buy your house and get your mortgage, but for your own sake, don’t do it before. Buying things on credit not only hurts your credit score, but it also leaves less money for you to use as a house payment.

And lenders look at this figure also to determine how much money they will lend you, and how much they will charge you to lend it.

So wait until after you’ve bought your home and moved in to get that new couch or big screen TV!