How does your Credit Score Affect your Mortgage Ability?

Building credit

Its 2018, Credit Card is a familiar word in our daily life. It is like a quick-loan which needs to be repaid within a time limit. Now with your debt payment is monitored by the loan sharks which maintains your credit points.

Credit points is a three digit number which decides your capability to take credit. If your Credit score is low your card may be terminated.

Credit points also play a vital role in your mortgage ability. Cards can be used for various purposes, like for short-term use, for buying a laptop or home appliances. Also can be used when you are on a trip and don’t want to carry cash. Long-term plans can also be made like VISA, rental loans or car loans, etc. All these debts that you create provide a limited time for repayment. If you can keep up with the deadline then your mortgage ability is likely to be fruitful. A mortgage allows you to take larger amounts of credits, especially for long-term projects. If your credit point fails to reach a minimum level your application for a bigger loan will be rejected.

When you apply for a mortgage, the loan sharks tally your credit score and your debt repayment history. CallCredit or Equifax are some reliable agencies where you can evaluate your credit point.

Other factors which lenders consider before accepting your application is a proof of your incomes and your expenses. Additionally, they will also check how you manage your savings and your decision-making skills.

Factors that decrease your Credit Points:       

Credit Points may vary due to several factors and those might be intentional or non-intentional, but will put a huge effect on your ability to seek a mortgage. The major drawback lies in building up that score again, which obviously takes time.

The major factors that can put your Credit points to downstream are:

  • Missing out a debt repayment or failing to repay a series of small debts.
  • If you are having a joint account or have any mutual credit arrangement with someone, and unfortunately he has a low credit score, chances are your credit points will be reflected the same. This result in affecting your own credit score and hence mortgage ability.
  • Having multiple Credit cards can sometimes be a nuisance. As the lenders might go through your managing history and if you fail to clear any huge debt managing multiple cards, that might spark an issue.

Improving Credit Score:

There are always two sides of a coin, so does Credit points. You don’t have to crestfallen if you have high debts or failing to get a good credit score in order to apply for a mortgage. There are plenty methods to increases your credit score which will boost your mortgage application.

Factors you should consider to increase your credit score are:

  • Make sure you have registered for the mortgage and stay on the electoral roll.
  • Always keep a proper track of your credit cards and to what extent are you using them. If a certain card is no used for a long time, close that account and terminate the card. This is helpful in replenishing some credit points.
  • Make sure you never miss a payment and also try to refund your debt as soon as possible. Especially if you have a large debt which is already dragging your credit points down, manage the first and fast.
  • Try not to create a debt in a different card while clearing another one. This only takes you back to square one.
  • Staying in a particular place also helps. Changing frequent locations affects your credit score as you may have to use your card more often.

In special cases such as, any previously rejected mortgage gets reflected,  Credit builder cards are available which helps you build your credit score faster with high-interest rates and low credit limits.

Lastly, to apply for mortgage always try to clear your debts and maintain a discipline through it. You do not need to trust your credit score always, as there are cases where the calculations can go wrong. Hence double check your scores.

Mortgage Ability vastly depends on Credit Points and your decision-making skills.

About Jennifer Cribsly

I'm a former real estate broker who specialized in helping first time buyers be able to purchase a home. Now full time mom, part time real estate owner/investor.
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