30 Aug Why a good credit score matters when buying a home

If you’re starting the process of buying a home, you might have heard people talk about the importance of a good credit score. In short, a credit score is a representation of someone’s creditworthiness which ultimately explains their ability and likelihood to repay any borrowed money. 

It’s calculated from credit history, money owed, type of credit used and any new credit accounts, and it plays a crucial role in the mortgage approval process. That’s just the start too. Here, we explain why a good credit score matters when buying a home. 

Better interest rates 

One of the biggest benefits of having a good credit score is that it provides you with access to lower interest rates on mortgages. This is because lenders will use your credit score to determine how risky you are as a borrower. A high credit score shows your creditworthiness and means you’re more likely to be eligible for lower interest rates. It makes all the difference too. Even the smallest reduction in interest rates can result in huge savings over the life of your mortgage. 

Higher approval rates

The higher your credit score the more likely you are to be approved for a mortgage because lenders will have a better idea of your ability to repay any borrowed money. This can mean that the door is opened to various mortgage options and lenders, and you could be one step closer to securing your dream home. 

Improved loan terms 

A good credit score means that more lenders will be willing to lend you money which means you also might qualify for higher loan amounts and more flexible payment terms. This means you have more choice when it comes to your mortgage and can find one that best suits your needs and lifestyle.

More power 

When the property market is competitive, having a strong credit score and a preapproved mortgage is a great way of showing sellers that you are a serious buyer who is prepared to move quickly. This can help you to stand out in negotiations and could help to secure the property you’ve always wanted. 

One final thought

Reviewing your credit score is an essential part of the property journey process and if there is work to be done on it, it’s important that you act fast before applying for a mortgage. Even better, some of these improvements are really easy such as ensuring the correct personal details are logged. Other ways to improve your credit score include paying down debt and making payments on time. But one thing’s for sure, investing in your credit score now can really pay off when it comes to searching for your dream home.