How fast and by how much will my credit score improve after buying a house? I would to hear all feedback?
April 7th, 2010 by admin
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Your credit score is used by banks, lenders and financial institutions to determine your creditworthiness. It is really trying to measure how good of a borrower you are. A higher score means that you will pay the loan back and you aren’t delinquent on making payments.
Your score is available from a credit bureau and is dependent on many things including:
1. the number of outstanding loans, credit cards, bank accounts you have;
2. how many times you’ve been late in making a payment;
3. if you’ve ever claimed bankruptcy;
4. the amount of outstanding loans compared to your credit limits;
5. how much of a history you have (longer is better);
The worst your credit history is, the worst your score is and your eligibility for new credit will decrease. In fact, some lenders may even charge you higher rates because they classify you as more risky.
Now, a credit score is a mathematical formula used by credit agencies to determine your creditworthiness (basically a black box to your or I). How buying a new house will effect your credit rating is dependent on your credit history and what your score was going into the purchase and your current payment activity (are you on time, late and how often). The longer your history, the slower it will change. If you had bad history and you’re now on time every time, you’ll see your credit score increase. Basically, you should continue to make your mortgage payments on time because ultimately it will cost you more to borrow money with a poor credit rating.