Planning the finances when buying your dream home is the crucial first step in the process of making it
a reality. But what many of us struggle with, is getting it right. If you are going through a mortgage
or home loan, various factors affect the interest rates, principal amount and the mortgage terms with
Credit Score being one of them.
A credit score is a numerical representation of your credit-worthiness, which is your ability to repay
borrowed money on time. Your credit score is based on several factors, such as your payment history,
credit utilisation, length of credit history, types of credit and recent credit inquiries..
A good credit score allows you to qualify for a lower loan interest rate. The difference in interest rates can make a huge difference in the cost of your mortgage over time.
A high credit score can make the loan approval process much faster, thereby reducing the wait time and the stress you may feel when trying to secure financing.
Strong credit score may enable you to get better terms on your loan, such as a bigger loan amount, a lower down payment and more flexible repayment options.
This is the most important factor that affects your credit score, so make sure you pay your bills on time, in full, and in full each month
This will show that you have good credit management and a knack for managing your finances well
Always make sure to check your credit report for any errors and dispute them as soon as possible
Too many credit applications in a shorter time frame can damage your credit score as it indicates credit dependency.
Having multiple credit cards, instalment loans (such as car loans etc) and a good credit history can help your credit profile grow
It takes time and discipline to build a good credit score. However, it is undeniable that this will
unlock the long-term benefits of your mortgage journey. You can put yourself in a good position to
obtain the funding you need to make your dream of home ownership come true, if you prioritise sound
credit management and take steps towards improving your score.