Looking to Get a Mortgage? Here’s How It Can Affect Your Credit Score
For many, buying a home is a massive step. Indeed, most homeowners will admit that it was not the easiest process for them to complete.
With that in mind, if this is the first time that you are looking to purchase a home, then one of the warnings you’ve probably heard over and over is that buying a home requires a lot of patience. If this is the case, then how can you minimize the damage that comes with buying your dream house?
Thankfully, in this segment, you’ll find all the subtle particulars to help protect your credit score as your turn your dreams into reality.
A Mortgage Isn’t Simply a Mortgage
Indeed, if you are worried that a mortgage will dent your credit score, then you’re somewhat right.
In the short-term of things, applying for a mortgage does harm your credit score.
As a matter of fact, when you submit your application for a mortgage, your lender will have to review your credit history to determine whether or not you are an ideal candidate for the home loan.
This kind of inquiry is known as a ‘hard credit inquiry, and it will result in your credit score losing a couple of points. That being said, one of the ways to avoid such a massive dent in your score is to look for mortgages only within a 30-day window period.
When you do so, the credit bureau will only look at the several applications for a home loan that you had applied for as one hard inquiry. Nevertheless, this will still result in a slight drop in your credit score, but not as massive with this strategy.
However, it is recommended that you be weary of the home-purchasing process which might result in more than one credit pull by the same lender.
Indeed, having a mortgage setup in place can take time, and the previous credit check might have even expired by the time you are prepared to take up the next loan.
With this being the case, the bank might have to perform a second credit check which might be outside the stipulated monthly period. This could translate to you missing out on some points as a result of the multiple inquiries that you’ve made.
Avoid Damage After Moving into the House
With the application process for a mortgage being long and at times complex, it can be frustrating to wait for a while.
Indeed, there is nothing you can do to speed up the process, and there’s no way you can avert having at least one hard credit inquiry.
Nevertheless, there are other credit mistakes that homeowners usually make which can be easily avoided.
Here are some of the most avoidable:
Making Applications for Quite a Number of Retail Credit Cards
–When you purchase a home that requires you to put some extra work in it, it’s a given that you’ll need to visit the a number of times.
Moreover, you might need some new appliances, as well as furniture for the home.
That being said, if you are opening a number of store credit cards to save up some cash while making these purchases, then you could be doing your credit some serious damage.
Similar to making a mortgage application, making a credit card applications means that a hard inquiry will be made to your credit card report.
With this in mind, it is advisable that you don’t overdo it when it comes to applying for a credit card. You could be having some serious losses in terms of points.
Not Making Bill Payments on Time
When you are moving, you can be distracted by a lot of activities. Indeed, you will have plenty of tasks to manage, and you might not have a regular routine to adhere to. Such a lifestyle might make you prone to missing one or two bills.
Unfortunately, this is one of the most detrimental things that one can do to their credit score. To steer clear from such a situation, most individuals recommend paying your bills on time by setting up alerts to remind you the time and place to make your bill payments.
This ensures your credit score is in good standing.
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