01 Mar How Does A Mortgage Increase Your Credit Score?
Unfortunately, not everyone is able to buy a house with a single cash payment, especially combine with the global economic crisis. So, this is where mortgage applications and home loans hop in to help. And what do you need in order to convince lenders to borrow you, money? A super-duper, incredible credit rating of course! A lot of people wonder how mortgages can affect their credit score either in a positive, or in a negative way. Sure, after your loan, you’ll definitely see a decrease, but in fact, a mortgage can increase your overall score in the long run. Baby Boomers Financial rounded up few of those positive impacts in this article. Check them out!
How Does A Mortgage Increase My Credit Score?
It Can Add Diversity to Your Credit
Payment history makes up a good score, however, creditors and lenders check for your credit diversity as well. A little bit of everything, like revolving accounts, installment loans, including cards, car funds etc., can add to your credibility as a borrower. And a mortgage, is an interesting counterpart in that mix. Additionally, it will soon become a positive factor to the category known as “age of credit,” which can be proved helpful later.
These are few tips to help you build a better score by yourself: “Credit Score: 5 Tips to Build a Good One.”
It Will Boost Your Payment History
After its approval, a mortgage can cause a drop in your credit score, effective immediately! But this is only due to the young of its age, and a temporary event as well. While you will be enjoying your own house, you’ll have plenty of times (few decades) to pay it back. And if you’re a diligent borrower who doesn’t sign for late, or missed payments, then you can benefit. Such a big installment loan like a mortgage, combined with on time payments, can do miracles on your rating.
As you can see, there are two sides of one coin, and it’s on your hand to choose which one to follow. All it takes is to make payments on time, and every time, in order to keep a balance. Of course, there are different factors that affect your rating and some things that work for others, may not work for you. However, you can consider your mortgage as a potential booster of your credit score. Currently applying for a loan, and you’re worrying whether it will be approved or not? Baby Boomers Financial specializes in credit repair with determined efficiency. Our certified of financial specialists can, and will help you, to achieve your financial freedom. Check here for our free credit review, and give us a call so we can help.