Your credit score or credit rating is a number assigned to you that is a measure of how good of a reputation you have as a borrower. The credit score condenses all of the information and factors found on your credit report into a single easy to understand number. This makes it easier for both borrowers and lenders alike to quickly see and understand how their credit history will affect their borrowing power. As it is a critical factor that comes into play when applying for a home loan, there are several things about your credit score you should be aware of.

Determining how good your credit score is is more or less straightforward, the higher your score is, the better and the more trustworthy to lenders you appear. The lower your score is, the worse and less reliable you appear. Your credit score is one of the most critical factors that your lender will use to assess the risk you may bring to them. This influences various aspects of any loans you apply for such as how much they will allow you to borrow, the interest rate or the length of the loan term. As a result, it is essential to be aware of your credit score if you are thinking of applying for a loan and also to know ways of improving it and keeping it high.

Ingredients for a Good Credit Score

  • Making monthly repayments on time
  • Refraining from applying for new credit cards and loans
  • Paying off any outstanding debt
  • Paying fees on time
  • A constant low balance on credit card

Ingredients for a Bad Credit Score

  • Frequently applying for credit cards and loans
  • Getting rejected in credit card and loan applications
  • Late payments on loans and credit cards
  • Overdue bills by 60 days or more

Your credit score or rating is an essential factor that comes into play when applying for a home loan. You must understand what contributes to a good credit score so you can have a strong one when you use for a home loan to give yourself the best loan terms possible.

If you have any further questions on credit score or would like to learn more, please get in touch with us today.