Your credit score is now the most important factor in determining how much house you can buy, so if you are in the market for a new home, you need to understand how it affects you.
In order to make it easy for mortgage companies to determine the risk of lending to you, they are using a system called credit scoring (also called "FICO" scores).
When lenders look at your credit report, they can instantly see how much debt you have, how reliable you are with bill payments, and if you've had any bankruptcies within the last several years.
With your credit report, lenders get a "credit score" which takes all of this information and boils it down to a number between 300 and 900. The higher the number, the less of a credit risk you are seen to be, and this is how lenders decide which types of loans you will be eligible for.
As with all new things, there is controversy over credit scores.
To be elligible for some types of loans, you require a minimum credit score without any exceptions. And credit scores fluctuate over time. In fact, the mere act of applying for credit can lower your credit score.
To maximize your credit score, you should avoid applying for any new credit cards or consumer loans.
Don't go to the discount store and take them up on the "No interest, no payments for one year" offer -- and avoid financing a car!
After you buy your home and get your mortgage you can do all of these things, but before then it's a bad idea. Buying things on credit hurts your credit score, and leaves less money for your downpayment.
Lenders also look at this figure to decide how much money they will lend you, and how much interest they will charge you on the loan.
That's why it's best to wait until after you've bought your home to go shopping for furniture and appliances. There is also another reason to wait.
Once you've bought your home, you can get a loan for up to 100% of your home's value to buy anything you want.
If you learn to play by the rules of the lenders' game, you can get the best credit score possible, which improves the odds that you can get the home of your dreams.
“Being new in Toronto, I was desperately looking for a good real estate agent, who could provide me a comfortable yet affordable housing property where I can live in peace and rejuvenation with my family. This was when one of my associates suggested me Pranav’s name. I am really glad that I took the suggestion. Pranav is an amazing realtor and helped me at every step. I am forever grateful. ”
“I definitely found the home of my dreams; all thanks to Pranav and his team. They took care of everything; starting from the location, comfort and affordability. My words of gratitude fall short for whatever they did to find the property I wanted. Thank you team, keep up the good job!”
“I had a property which was not being able to go up on sale for a very long time. Pranav not only helped me to stage it for me, but also took every effort so that I can get the best prices out of the same. I cannot thank him enough for every gesture he took for me. Thank you for everything. ”
“I was in a grave need of a good property to shift base from Hamilton to Toronto. And, none of my previous agents could help me find what I wanted. This is when Pranav Bhatt came to my rescue. I am extremely elated with his sincere assistance. ”
“My words fall short of praises when I have to write about the amazing assistance that Pranav had provided to me. It goes without saying that had it not been his extensive assistance, I would definitely not be able to find such an affordable property in Toronto. Thank you for everything Pranav!”
“6. Thank you for all your efforts Pranav. You had been a great realtor. I don’t think that I could be getting my dream home without all your support and assistance. I really have no words to describe how grateful I am to you. And I wish you all the best for all your future endeavors. Looking forward to work with you again.”