Mortgage interest rates have dominated the news lately, but there's another aspect of buying a home people shouldn't forget about: credit scores.
It's one of those things many individuals don't even think about it until it's time to make a big purchase. But a poor credit score can be a significant factor in lenders determining whether they will approve someone for a loan.
A credit score of 700 or more will put consumers in a great position to get approved for any loan they apply for, but only half the population of the U.S. meet this criteria, according to Patch.com. But for those who don't quite reach that mark, hope is not lost to get a mortgage because there are several things individuals can do to improve their credit scores, the source noted.
Applicants with a higher credit score are more likely to receive a lower interest rate on the mortgage loans, so there is a big incentive for people to improve it before they apply. A strong credit score can potentially slash an individual's interest rate in half, according to U.S. News and World Report.
One of the easiest ways for an individual to improve their credit score is to pay down existing credit card balances and pay bills on time. Applicants who do this are likely to see a drastic improvement in their credit in as little as one month, Patch.com reported. But not everyone might be in a financial situation to pay down debts quickly, so they need another option. Applicants can also become an authorized user on a family member's credit line, which allows you to share their credit history, the source noted. This is a good option for those who need a little more time to improve their scores but want to buy a house in the near future.