Credit affects many things. Credit especially affects the homebuying process. During this process, your credit score is checked both during loan processing, as well as before closing. But why is credit so important? Credit demonstrates your ability to pay off debt in a timely manner.
Interest and loans
Your credit score will affect interest rates on a loan. If you have a lower credit score, your interest rate may be higher on a home loan or a vehicle loan. A higher credit score can result in a lower interest rate. The higher your credit score, the more likely you are to be considered a reliable person to pay off a loan.
How do I raise my credit score?
It is important to raise and maintain your credit score, as this is what lenders look at when providing you with a loan. There are many different ways to raise your credit score.
- Pay your bills on time
- Use your credit card lightly but consistently
- Avoid closing credit accounts
- Pay off your entire statement by its due date
- Limit opening new credit accounts often
Credit score is important, especially when you are taking out a loan. Keeping this in mind, work on raising and maintaining your credit as you work toward purchasing a home to get the best interest rate possible.
