The Impact of Bad Credit For St. Louis Home Buyers
There might not be anything that can shut down your chance of getting a mortgage as fast as bad credit can. Lenders use your credit report and credit score to judge if they should take a chance on loaning you money. If your report has some negative dings on it you might find that lenders are scared away.
So, as you look at buying a St. Louis house here are the things that you need to know about the impact of your credit score on your chances of being approved.
How much will bad credit really cost you?
Credit scores start at 300 and go all the way up to 850. But there are few people that have a “perfect” score. If your score is in the low 600s or higher you have a good chance of being approved for a St. Louis mortgage. The lower your score the less likely you will be to get approved.
However, even if you can get approved for a loan at a lower credit score you are going to pay for it in the long run. The lower your credit score goes the higher your interest rate is going to rise. Even a slightly higher interest rate can make a large difference on the amount that you are going to pay over the life of your loan.
How to improve your credit score
If you are one of the many Americans that find themselves with low credit, all is not lost. As soon as you become aware of the impact that your score is going to have on your ability to be approved for a loan you can start making changes to help improve your chances of getting a loan.
The first place to start is with checking your credit report for errors. If you find something on your report that is incorrect you should begin the process of having it removed immediately. Understand that this process will not happen overnight. The sooner you set out to resolve, the better.
Then, make sure that all of your accounts are current. If you have accounts that are delinquent, there is no lender that is going to want to loan you additional money. They are looking at the way that you have handled your current loans and those in the past to see if they can trust you if they loan you money.
Once you have your accounts current you can start working on paying down on the balances. There are different strategies to do this. Some people recommend paying down extra, even just a little, on the principal of the loan with the highest interest first. Others believe that you should work on paying down on the account with the lowest balance first so you can pay it off faster. Either way, you are making good progress if you are paying down on your loans.
Let’s not forget that you also need to stop taking out loans and running up your credit. You need to work on paying them down instead. Each new loan that you take on when trying to get a St. Louis mortgage is going to delay your progress.