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Will Your Credit Score Help With Your Home Buying?

Surprisingly a lot of people don’t pay much attention to their credit score until they are ready to make a major purchase like a home. Then they are faced with the realization that this is going to be a big factor in whether they will qualify for a mortgage, or if they do what interest rates are going to be open to them to take advantage of.

Most lenders are going to take a close look at your credit score while they are determining if you are  a good risk or not. Your credit card tells a detailed story about you because it reveals your credit history. You goal is to achieve a high credit score and the range in which it can fall in is between 300 to 900. Ideally you want to be over 680.

If you are even just in the process of thinking about buying a home the first thing you want to do is check out your credit rating. There are ways that you can get this for free and you really want to take this upon yourself to do prior to approaching your lenders.

There are some distinct advantages to doing this. First it is a way for you to determine that the information it contains is accurate. Many people are shocked to learn just how often mistakes are made on this very important document. Sometimes it contains a credit remark that should be removed, or has been put there by mistake, or isn’t even related to you.

If you do find errors and you can validate that the information contained is not true you can request that the credit bureau remove these. Sometimes this can be done verbally but most times in writing. Wait for a few weeks then check again to see that it has been corrected.

If you find your credit score is weak then determine what steps you can take to correct this before you buy your home if possible. A strong credit score could make a big difference in your mortgage interest rate which could save you thousands of dollars over the term of the mortgage.

All too often individuals are in such a big hurry to buy their house worried that prices are going to go up that they don’t realize how an extra step such as fixing their credit rating can have a huge impact on their finances. While they may get the house of their dreams now for a few thousand dollars cheaper they will be paying more for it in the long run because they have hit with higher interest rates simply because they had a poor credit score.

 

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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