Buying a house with poor credit | Boost your credit before buying a home

Boost your credit before buying a home

Buying a home is the great American Dream for many. But if you have bad credit, and a history of paying your bills late, you may have to defer that dream until you’ve shored up your finances.

If you’ve struggled to pay your bills on time, the odds are high that you have a low credit score. This score, also known as your FICO score, gives mortgage lenders a snapshot of your financial history. If the score is too low, you may not qualify for a mortgage loan. And if you do qualify, that loan will come with high interest rates.

On the other hand, if you have a good credit score – usually above 700 – you most likely will qualify for a mortgage loan that comes with low interest rates. This is a big deal; your mortgage payment can be lower by hundreds of dollars each month depending on your interest rates.

If your credit score is weak, you can take steps to improve it. The first is to begin paying all your bills on time. Next, pay off your credit card balances, and then close those accounts that you’ve completely paid down.

Both of these steps will prove that you can handle financial matters properly.

Problem is, improving your credit score doesn’t happen quickly. Establishing good financial habits will boost your credit score. But it takes a long time, sometimes years, to erase a history of poor financial decisions.

If your credit score is too low, you’ll need to wait before applying for a mortgage loan or buying a house. Don’t look at this as a negative, though. Look at it as a chance to get your own financial issues under control. You’ll need to do this, after all, if you want to take on the responsibility of a monthly mortgage payment.

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