Let’s start by learning more about credit.
Building good credit is like building a house. You start with a foundation – which, in this case, is your current credit score – and build from there. It’s all about how you spend the money you earn and how much debt you incur.
Why credit is important
The way your credit is gauged is through your credit score. The better your credit score, the more likely a creditor is to trust that you will pay them back. A strong credit history can help you towards your goal of homeownership.
How credit is reported
There are three primary national credit bureaus that monitor and report on your credit — Equifax, Experian, and TransUnion. Your credit score is one important factor towards becoming approved for a mortgage.
How credit impacts your ability to buy a home
Your credit score can affect where you qualify for a loan, as well as the type of loan and loan terms. You may still be approved for a mortgage with a lower credit score, but you may have to pay a higher interest rate.
Simple, easy steps to build your credit.
If you’ve ever borrowed money from a bank or taken out a loan for a car, you know that good credit is important. Give yourself credit for learning these steps to help you establish, build, and manage your credit. You deserve it!
Keep in mind that you should avoid maxing out your credit cards or carrying a balance from month to month, as much as you can. Paying on time can mean paying less on interest and can help improve your credit score.