Why Good Credit Matters When Buying a Home

If you’re thinking about buying a home, your credit score is one of the most important numbers in the process. But the good news is you don’t need perfect credit to become a homeowner.

Understanding your credit and taking steps to improve it can help open the door to more opportunities when you’re ready to buy.

Why does credit matter?

Lenders use your credit history as one way to evaluate how you’ve managed debt and financial obligations in the past.

Your credit profile may impact:

• Loan eligibility
• Available loan programs
• Interest rates
• Monthly payment amounts

That’s why it’s a good idea to understand your credit before you start house hunting.

Many buyers avoid checking their credit because they’re worried about what they’ll find.

Knowing where you stand gives you the opportunity to make improvements before applying for a mortgage.

Review your credit regularly and look for:

• Incorrect account information
• Accounts you don’t recognize
• Late payments reported in error
•  High credit card balances

Catching issues early can save time later.

Simple ways to improve your credit

Building stronger credit doesn’t happen overnight, but small steps can make a difference.

Pay bills on time

• Payment history is one of the biggest factors that impacts your credit score.
• Setting up automatic payments or reminders can help you stay on track.

Keep credit card balances low

• Using a large portion of your available credit can impact your score.
• Whenever possible, try to keep balances manageable and avoid maxing out credit cards.

Avoid opening multiple new accounts

• Applying for several new credit accounts in a short period may affect your credit profile.
• If you’re planning to buy a home soon, talk with a mortgage professional before making major credit decisions.

 Review your credit report

• Mistakes happen. Checking your credit report regularly allows you to identify and dispute errors that may be affecting your score.

You don’t need perfect credit to buy a home, but understanding and maintaining your credit can help you prepare for the homebuying process.

The earlier you start paying attention to your credit, the more options you may have when you’re ready to make your move.

Download our Conquering Credit Book for more

Have questions about how credit may impact your homebuying journey? Connect with a Stockton Mortgage Loan Originator to discuss your goals and learn more about your options.

Stockton Mortgage Corporation is not a credit repair company