Credit History and Mortgage Qualification
Credit history is often the greatest obstacles in purchasing a new home, and many Americans do not realize its importance until they are trying to qualify for a mortgage. Regardless of an individual's income and job history, anyone can be denied a mortgage on the basis of bad credit. A low credit score can immediately bar you from owning a home, and if not, it will almost certainly increase your interest rates, totaling to tens of thousands of dollars. This problem is easily avoided by taking good care of your credit, which means one of two things: Managing your existing debts and payments or starting a credit history.
Your credit score is determined by several factors. The length of your credit history in comparison to how often you borrow money and how successfully you pay it back are the most important factors. Credit scores are also determined by how timely your bills are paid, if you have ever defaulted on a loan, how much credit you have been offered, and if you have ever declared bankruptcy or had a foreclosure. All of these things greatly contribute to your total credit score, but surprisingly, the lack of credit history or credit accounts can result in a low credit score as well. This goes back to the length of credit history and serves to show us that creditors want to see a history of responsibility of debts.
If you have no credit accounts or debts, it is a wise decision to open a credit card account and use it to make some sort of monthly payments, like the electric or phone bill. Then pay off the bill entirely at the end of every month. This will prevent you from paying extreme interest on those borrowings while establishing a credit history of timely payments.
For people who already have credit histories, the challenge is keeping it looking great. It is helpful to begin by requesting a copy of your credit report and examining it to find any corrections that may need to be made. Once you have accounted for all of your credit history, try to keep credit cards only half way to the limit or even pay the entire balance each month. The most important thing to remember about credit cards is not to let them go past due. This reflects poorly on your credit score.
In some situations, an individual's credit is so poor that it seems impossible to turn it around, but there are many non-profit agencies dedicated to helping people solve their credit problems. These agencies help people to consolidate and pay off their debts so that they can have the credit score they need to get a good mortgage. Don't let your credit be the deciding factor in buying a new home. Take the time and effort to keep a good credit score.
About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.
Your credit score is determined by several factors. The length of your credit history in comparison to how often you borrow money and how successfully you pay it back are the most important factors. Credit scores are also determined by how timely your bills are paid, if you have ever defaulted on a loan, how much credit you have been offered, and if you have ever declared bankruptcy or had a foreclosure. All of these things greatly contribute to your total credit score, but surprisingly, the lack of credit history or credit accounts can result in a low credit score as well. This goes back to the length of credit history and serves to show us that creditors want to see a history of responsibility of debts.
If you have no credit accounts or debts, it is a wise decision to open a credit card account and use it to make some sort of monthly payments, like the electric or phone bill. Then pay off the bill entirely at the end of every month. This will prevent you from paying extreme interest on those borrowings while establishing a credit history of timely payments.
For people who already have credit histories, the challenge is keeping it looking great. It is helpful to begin by requesting a copy of your credit report and examining it to find any corrections that may need to be made. Once you have accounted for all of your credit history, try to keep credit cards only half way to the limit or even pay the entire balance each month. The most important thing to remember about credit cards is not to let them go past due. This reflects poorly on your credit score.
In some situations, an individual's credit is so poor that it seems impossible to turn it around, but there are many non-profit agencies dedicated to helping people solve their credit problems. These agencies help people to consolidate and pay off their debts so that they can have the credit score they need to get a good mortgage. Don't let your credit be the deciding factor in buying a new home. Take the time and effort to keep a good credit score.
About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.
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