Why a Poor Credit Score Should Not Keep You From Buying a Home

Dan Barcelon
Dan Barcelon
Published on September 9, 2017

What You Will Lean in This Article (Reading Time – 5 Minutes):

  • Why you should consider owning a home
  • How credit scores factor into the home-buying process
  • How to improve your credit score
  • Seeking help when improving your credit score

Most people dream about becoming a homeowner at some point in their lives. This is, after all, a quintessential part of the American dream. You may want to physically own the space that you live in rather than have to pay rent to someone else for this space for the rest of your life. However, there are financial benefits associated with home ownership as well, but you must typically have good credit scores in order to take advantage of those financial benefits.

Understanding the Benefits of Home Ownership

If you have poor credit scores, the financial benefits of home ownership may currently be unattainable to you, but there are ways to improve your credit scores. Learning more about what the benefits of homeownership are can help you to find the motivation to improve your poor credit scores. Homeownership offers more benefits than simply giving you the peace of mind that comes from owning the place where you rest and relax at the end of the day. When you make a rental payment to a landlord, your rental payment is paying off your landlord’s mortgage. When you make your own mortgage payment, your payment is paying off your loan and helping you to build your own wealth. More than that, you can enjoy tax write-offs for your mortgage interest and property taxes. Eventually, you can own your home free and clear, and this is often an instrumental component to a retirement plan and achieving financial freedom in your life. There are many financial benefits that are associated with home ownership, but you need to improve your poor credit score if you want to take advantage of these benefits.

Poor or Bad Credit Score

Why Your Credit Scores Are Important When Buying a Home

You may be wondering why a poor credit score matters when you are trying to buy a home. Most people use a home loan to buy a home rather than pay for the sales price entirely with cash, and lenders review your credit scores to determine how risky it is to make a loan to you. A poor credit score signifies to a lender that you historically have not used your credit responsibly. You may have borrowed more money than you could manage to repay comfortably, or you may have not made your payments on time to your other lenders as agreed. A poor credit score signals to a lender that the lender may have trouble receiving mortgage payments on time or in full from you in the future. Essentially, they are taking on more risk by making a loan to you. Each lender will analyze this risk in different ways. They will determine the level of risk that you present to them as well as their overall threshold for tolerating that amount of risk.

What You Can Do to Improve Your Credit Scores on Your Own

If you have a poor credit score, you may have trouble getting approved for a home loan in some cases. If you do manage to get approved for a home loan, you may only qualify for a high interest rate on your loan. Keep in mind that a higher interest rate can create higher monthly loan payments that may be more difficult for you to pay for each month. Ideally, you will improve your credit score before you apply for a home loan so that you qualify for the best loan terms available, and there are multiple steps that you can take to accomplish this goal. If you have a poor credit score right now, you can begin may making any future loan or debt payments on time as agreed. Consider setting up automated payments to ensure that this happens. Set up an emergency savings account or backup account that is linked to your checking account for auto draft protection. Avoid taking out any new debts, and eventually your total debt balance will decrease. As you make your payments on time and as your debt balances decrease, you will notice that your credit score slowly increases over the course of several months or more.

What to Expect When Trying to Improve Your Scores

If you been thinking about improving your poor credit score, you should set realistic expectations about the amount of time and effort this process will take. A truly poor credit score cannot be improved overnight. In fact, it may take many months of hard work and solid effort before you will see a significant improvement in your score. More than that, you cannot falter during this time, or you will see your score plummet again. With proper and regular effort, you should see a slow and steady improvement in your score, but it may take a considerable amount of time before your poor credit score has improved enough so that it can be considered good or excellent by a home loan company

When You Need Extra Help Improving Your Poor Credit Score

Many people who have a poor credit score have trouble achieving the desired results on their own. They may become frustrated with how slow the progress is being achieved, or they may not be certain that they are taking the right steps to achieve success on their own. If you need additional help improving your poor credit score, one idea is to reach out to Credit Saint. This is a third-party credit repair company that has successfully helped many Long Beach area residents improve their credit scores so that they can achieve other goals in life. You can find out more about them here.

Why I recommend Credit Saint:

  • They have a 90-day money back guarantee if they are unable to remove any negative questionable items
  • You’re not passed along a different rep every time – you’re assigned a team of personal advisers who know and understand your case
  • Their credit program not only removes negative items or repairs bad credit, but helps you build good credit and educates you on how to do so beyond their service
  • You can track your progress  with an online account page with progress reports
  • You have unlimited access to a Specialist

A poor credit score is an unfortunately common dilemma that prevents many Long Beach area residents from achieving the ultimate dream of being a homeowner. However, homeownership offers true financial benefits that you can and should take advantage of. A poor credit score should not hold you back and prevent you from moving on to achieve this monumental goal. Evergreen Properties and Investments is ready to help you start searching for your dream home in the Long Beach area, so call us today to schedule a consultation with our team.

From the Author: My name is Dan Barcelon and I believe that Real Estate can be one of the most valuable assets you’ll ever own. I’m dedicated to educating and guiding my clients on how to manage and leverage their homes to create an Evergreen legacy for themselves and their family. I primarily consult both home buyers and home sellers on reaching their personal and financial goals through Real Estate in the following cities of Southern California: Long Beach,  Carson,  Cerritos,  Signal Hill,  Torrance,  Lakewood,  Cypress,  Downey,  Bellflower,  Norwalk,  Wilmington,  La Palma,  and Artesia.

If you’d like to discuss if buying, selling, or investing in real estate is right for you at this time, feel free to reach out. You can call/text me at 562-270-5812, or you can e-mail me at danb@EPIrealestate.biz.

Related Articles:

Luke Skar – 13 First Time Home Buyer Mistakes To Avoid

Kevin Vitali – Making the Decision to Buy Your First Home – First Time Home Buyer Advice

Paul Sian – 3 Smart Tips For Improving Your Credit Score Prior To Applying For A Home Mortgage

Why a Poor Credit Score Should Not Keep You From Buying a Home
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