Credit Score Myth or Fact?

Let’s play a little game we like to call “Myth or Fact?” Our topic today is credit score myths and facts, especially as they relate to obtaining a mortgage.

Myth or Fact? – Having poor credit will prevent you from buying a home in the future.

Myth – Credit scores increase or decrease as you change the way you handle credit. If you manage your finances wisely, your credit score will improve with time – to the point that you may qualify for a mortgage.

Myth or Fact? – Besides your credit score, there are many factors that influence your ability to get a mortgage loan.

Fact – Lenders will consider your amount of debt, your current income, and your employment history – to name a few. So, a good credit score does not necessarily guarantee that you will be eligible for a home loan, and a less-than-perfect credit score doesn’t mean you’ll automatically be denied.

Myth or Fact? – Your credit score will decrease significantly if several lenders are running credit background checks on you – all in the same time period.

Myth – This is kind of a tricky one. A few “hard” credit pulls (which are completed, with your permission, by mortgage lenders when they are determining your ability to repay a loan) may have a minimal negative impact on your credit score. But, if you are rate shopping and do a series of “soft” credit pulls (which are often used during the pre-approval process, and do not require your consent), there should be no meaningful impact on your credit score.

There you have it! Hopefully, these myths and facts give you a little clearer picture of how credit scores work, and how they impact your ability to get a mortgage.

One important note to keep in mind: If you have a mortgage loan in process, consult your mortgage loan professional before paying any outstanding debts. It is always good practice to pay bills on time, but paying a long outstanding debt can sometimes negatively affect your credit score (which comes as a surprise to many people).

If you’re ready to apply for a mortgage (or would just like to get a little more information about whether or not you may qualify), contact your Waterstone Mortgage loan originator for a complimentary consultation!

This article is presented to you by Waterstone Mortgage. Please click here to read the full article