The Importance of a Good Credit Score When You Buy a House
Category Buyer Information
Buying or renting a house is exciting, but your credit score could make or break your chances of a successful transaction.
Regardless of whether you are renting or buying a house, the Seeff Property Group reports that your credit history is one of the first things that will need to be checked. For this reason, it is crucial to understand what makes a good credit score and how to keep it healthy so that your desired residential options are available.
A good credit score is built over time based on your record of making your cell phone, store account and other payments timeously. Credit scores are valuable tools banks, estate, and rental agents use to assess your reliability. Any delayed or missed payments reflect poorly and will have a negative impact on your credit history.
Once your home loan or rental agreement is approved, your good credit score still needs to be maintained. It is important not to take any financial risks which might affect your credit standing, as banks can legally revoke their loan offer at any point before the transfer has occurred.
What Is a Good Credit Score?
SA score above 670 is considered a good credit score, while anything below 600 is considered high risk. Credit scores work on the following scale:- 300 to 499 - Very poor.
- 500 to 600 - Poor.
- 601 to 660 - Fair.
- 661 to 780 - Good.
- 781 to 850 - Excellent.
Depending on the severity of credit score issues, it could take anywhere from 3 months to a year to redeem a poor credit profile, making it crucial to maintain a good record as best possible.
Why Do You Need a Good Credit Score?
Having a healthy credit history is essential as this is one of the first things landlords look for in acceptable tenants. If you are a prospective buyer, a good credit score gives you the best chance of getting your home loan approved.Ways to ensure that you have a good credit history include the following:
- Pay outstanding amounts as soon as possible.
- Keep outstanding balances low.
- Do not take on unmanageable amounts of credit.
Remember that all outstanding debts will be offset against your assets and earnings by creditors to check affordability. These figures will impact what options are and aren't accessible to you as a tenant or buyer.
Keep Track of Your Credit Score
Various credit bureaus track your payment and credit history and will send you one report free of charge each year. You can contact them directly to verify whether or not you have a good credit score; however, this can be costly.
It's advisable to keep track of relevant documentation and stay informed and organised.
At Seeff, we understand the challenges of moving house. While your good credit score is in your hands, our trusted Property Practitioners are here to help you find the perfect home. Contact us today to find the ideal property to purchase, or read our blog for a quick and easy guide to moving house.
Author: Seeff
