Buying a home usually involves securing a mortgage and, not unreasonably, lenders prefer borrowers who have demonstrated they can pay off debt. And how do they demonstrate that? Why through credit scores which show how they’ve handled financial obligations, such as credit cards, car loans, and student loans, in the past.
According to a recent article in Realtor.com, a credit score of 740 or above should entitle the would-be borrower to a good interest rate and possibly more attractive mortgage terms. A score below 700 could label the borrower as a potential risk.
Since nearly 25% of Americans report errors in their credit scores, it’s definitely worth checking. If there is a history with only one late payment, you may get it removed. If there is a longer history, it’s time to start re-building that score.
Finally, a larger down payment can improve the chances of acceptance of a mortgage application, although normally at a higher rate of interest.