Credit or No Credit: The Conventional Way
Credit or No Credit: The Conventional Way
Owning a home is a dream that most people aspire to in this country. Buying a home is simply part of the “American Dream” that people envision for their futures. Others see purchasing property as a great investment that can help them to achieve greater financial security. Unfortunately, not everyone is capable of attaining this dream due to difficult financial situations and problems in the past that have resulted in diminished credit scores. Of course, not everyone that has ever bought a house has a fantastic credit score, which brings up the questions as to whether credit is really necessary to buy property.
Your credit score is a compilation of a variety of information regarding your financial activities. This score is only one of several factors that go into a mortgage lender’s decision as to whether he will offer you a loan. It is impossible, however, to define one specific score or other financial factors that will be necessary to secure a home loan. This is because every lender has a specific method for evaluating the credit worthiness of an applicant to determine if he is a valid candidate for receiving a loan. When considering purchasing property it is important to remember that it is not just your base credit score that is going to be evaluated, but rather your financial history and other qualifications such as:
· Your salary
· Any other income you receive
· Your overall debt
· Your job steadiness
· The amount of available credit you have
There are government-backed mortgage programs available, but even these programs generally have minimum credit score qualifications. Some programs do exist that do not have a credit score minimum and allow consumers with low or no credit to qualify for lending programs with other qualifications such as income thresholds, military service or other specifications. These programs generally offer better interest rates and lower down payments for those with better credit scores.
The bottom line is that if you are interested in buying property, your credit score will matter. Even if you are applying for a program that does not have a minimum credit score requirement your score will have an impact on your down payment, your interest rate and other elements of your loan. It is recommended that if you are planning to purchase property you should put effort into improving your credit score. Focus on paying off debt and making steps toward increasing your creditworthiness.
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