When it comes to getting a house on mortgage, the first thing that you need to keep in your mind is how to adjust your finances to afford your monthly budget. If you’re looking for a house, you want to get the best deal possible. Your credit rating is a big driver, then your debt ratio and so on.
Bad credit can hold you back
Your credit rating is a quality indicator for lenders, for lack of a better term. A high score means payments have been made on time, low risk for this consumer to miss payments or default. This rating is affected by two things primarily: a) failure to pay on time (late payments or non-payments), b) high utilization of credit cards and line of credit (i.e. you’re maxed out). There are few things you can do to improve your credit score.
- Pay your bills on time:
If you have stumbled with bad credit, do not worry! There are many things that you can do to mend your credit scores. To start with, make sure that you pay all your bills on time. Not paying the bills on time might cause financial havoc for you in future. Paying your bills on time is without any doubt the simplest (as well as the easiest way) to get rid of the bad credit rating. Not only this, it will also help you maintain a healthy financial reputation for yourself.
- Use your credit card wisely:
One thing that most of the people do not realize about the bad credit rating is the fact that their credit card might act as the major culprit towards the credit score that they have. When you go out for shopping, make sure that, you do not cross the limit. Getting too close to the card limit might also cause bad credit issues for you. For example, lets imagine that you have the limit of 10,000$ on your credit card. If you shop away worth 9999$, you might have to deal with an accumulation of debt leading to a bad credit score on your record.
- Try to pay what you spend:
When you pay your bills, try to make sure that you pay them in full amount! If you pay less than what you spent and let the remaining amount get carried forward for the next period, it causes debt to accumulate. Accumulated debt leads to high utilization, which in turn pulls down debt.
- Pay on time:
This is straightforward. Pay your bills on time and do not miss payments.
- Consolidate debt:
You can consolidate your debt through a financial expert or a broker. This lets you bundle payments together and establish a regular payment pattern. This will gradually raise your credit score and you will be able to qualify.
In any case, speak with us at PrestoMortgages if you have credit issues but would like to explore mortgage options. If you have a viable income stream, credit score along should not block us from getting you the mortgage you need.