Importance of a Good Credit Score While Purchasing a House

Do you make your payments responsibly or are usually slacking? Do you make your credit payments at time? A good Credit score should always be maintained because it is important in a lot of situations even in which you wouldn’t think it would be necessary. One of these situations is when you are applying for a loan to purchase your own house.

There are many credit scoring algorithms that evaluate your credit history to calculate your score. But whichever algorithm is used the scores they calculate fall into the same range to show either they fall in the good category or a bad one. The credit score range from bad credit to excellent credit is usually:

  • Bad Credit – 600 and lower
  • Poor Credit – 600 to 649
  • Fair or Average Credit – 650 to 699
  • Good Credit – 700 to 749
  • Excellent Credit – 750 and higher

Credit Score Ranges

When you are buying a house, there are many aspects in which you will need a good credit score. Out of these, we have enlisted top 5 benefits you will get if your credit score falls in the good to excellent category:

1.Approval of loan

Financial institutions and money lenders are very cautious in approving loans and the loans are approved of only those people who have a good credit history. It is to ensure that the person will be able to pay off his/ her loans. So if you don’t want your house loan to be rejected you must keep a clean and crisp credit history to fulfill your dream of buying a house.

2.Low interest rates

A good credit score will enable you to bargain with your lender on lower interest rates, as those people are caught in high interest rates, which were unable to garner a good credit score. This means the more responsible you are, the more lenders will show trust in you.

3.Lower Mortgage Payment or Installments

It is simple maths that the lower the mortgage and interest rates you can get, the lesser you will have to pay in the future. It means that the good credit score that you have in your past will also affect the amount of money you will have to pay against your mortgage or loan. You can save hundreds even thousands of dollars by being vigilant and responsible about your credit score.

4.Lower Insurance Rates

Insurance companies also formulate their insurance policies taking in account your credit history. A higher credit score will result in a lower insurance fee or premium. That will help you a lot in choosing the best insurance policy for your house while paying lesser due to lesser insurance rates. Not only house insurance, it will also help in getting other insurances as well.

5.Fewer Problems in Getting Utilities

Along with lenders and mortgagers, the utility providers also check your credit score to see how responsibly you have paid your dues in the past. It can create a problem for you in getting the utilities hooked into your new house if you have a bad credit history or score.

It is very important to have a good credit score otherwise it will create a lot f problems for you especially when you are trying to purchase a house to create a safe haven for yourself and have a family. So be responsible and pay your dues in time. Take care!

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