No matter where you are in the world, there are certain things that directly influence your ability to secure a home loan. Getting a home loan in Tyler, TX is no different. Basically, in Texas, several factors play a vital role in determining whether or not you get a home mortgage. One of these things is your credit score. I know most of you are entirely in the dark when it comes to such matters, but do not panic; we are here for you. Here is everything you need to know about credit scores and home loans.

What is a Credit Score? 

Before we get into the topic of the day, it is good for you to have some background information on “credit scores.”

So what is a credit score? A credit score is a number that shows an individual’s creditworthiness. It basically approximates a person’s likelihood of repaying borrowed money.

How are Credit Scores and Home Loans Related? 

Credit scores directly impact home loans in two main ways;

  • Your credit score determines your loan options
  • It can also influence the total cost of your loan.

Let me explain;

In the beginning, your credit score will dictate which home loan options you can opt for as a homebuyer. For instance, some loans will need a minimum score of 500, while some will need a higher score of 650 or even more. Therefore, the options presented to you will depend mainly on your credit score.

Your credit score will also determine the total cost of your loan. Why? This is because when you have a higher credit score, it means you usually pay your bills on time. Therefore the lender is confident that you will pay your mortgage in the same way/manner. As a result, you will get lower interest rates.

However, when you have a low credit score, it means you owe a lot of money and tend not to pay your bills on time. So for lenders to compensate for this risk, they increase the interest rates. In the end, you will find that you pay a lot more for the loan. 

How Do I Check My Credit Score To See If I Can Qualify for Loans Near Me?

Now that you are conversant with credit scores, it is time to check if you qualify to get a mortgage loan. So how do you do this?

Below are a few ways of checking your credit score;

  • Visiting a non-profit credit consultant

A consultant/advisor can easily retrieve your credit scores and advise you appropriately.

  • Visiting a free credit score checking website

Nowadays, there are many websites that you can use to check your credit scores at no cost. Just sign up on any credible site and check your scores.

  • Checking with the company that issues you with your credit card

Most credit card issuers usually offer complementary services. One of these services is checking a person’s credit score. So if you need to know your score, visit your credit card issuer’s office and request your credit score report from them.

Home Mortgage Eligibility

Once you get your results, it is vital to gauge your loan eligibility based on the credit score. In essence, the score is measured on a scale of 300 to 850.

What does this range mean?

  • Excellent

When you have a credit score of 720 and above, it is regarded as excellent. 

  • Good

Good credit is when you have a credit score of 690 to 719.  

  • Fair 

Fair credit is when you have a score of 630 to 689.

  • Poor

This is when your credit score is below 629.

Different institutions offer different loans depending on where your score falls in the scale highlighted above. In some cases, you might get a loan with an above-average score; in some, you cannot. But one thing is for sure, people with abysmal credit scores, in most cases, do not get access to home loans. 

How to Improve Your Credit Score? 

For those who suffer from bad credit, in as much as the situation seems hopeless, it is not permanent. There are remedies that you could undertake to improve your credit score. Some of these remedies are listed below;

  • Pay your bills on time

To boost your credit score and increase your chances of getting a loan from a mortgage Tyler tx lender, it is advisable to always make payments on time. This is because late payments are known to dent one’s credit score. 

Furthermore, they stay on your report for seven years or even more, and this is not a good look on your credit score statement.

  • Get help

Another great way of improving your credit score is by talking to an expert. Mortgage Tyler credit advisors are always open to help you build your credit score.

  • Pay off your debt

Try your level best to pay your debts in full. Doing so will have a positive effect on your credit score.

Conclusion 

Although it is challenging for most people, it is always important to strive to have a good credit score. This is because it will come in handy when purchasing critical things in your life, such as a house. If you currently have bad credit, follow the tips highlighted above, and before you know it, you will be eligible for a good home mortgage deal.