Buying a home involves numerous steps that can make the whole process extremely wearing. Choosing to work on your credit is as vital as making sure your credit score is at a good level. Americans have a credit score averaging out to 687, according to Experian’s most recent report.

What is Your Credit Score?

Credit scores are one of the ways lenders determine how much of a risk you are as a borrower and is a large determining factor to your mortgage. Your credit score is important for the application process, but your credit score is not the determining factor in whether you are approved for the loan or not. Your credit score mainly dictates your mortgage loan rate. The minimum time required to calculate your credit score is six months. If you have no history of credit, then you should start looking into building your credit immediately. As discussed previously, there are ways to get around having less than exemplary credit. Having no credit, however, is a completely different story and requires a lot more effort on everybody’s parts.

Credit Scores’ Impact on Mortgages

Credit scores largely determine how much your mortgage rate will be. The better the credit score you have, the better the mortgage rate. Even the slightest difference of a few percentage points can make a significant difference of several thousands of dollars to your total mortgage payment. Hence getting your credit score as high as possible might lead to thousands of dollars saved from your mortgage loan. Of course, this can vary by state, loan amount, and type of loan but the evidence is clear that a higher credit score, the more you save. Raising your credit score cannot be done in a few weeks, therefore if you want to get the best mortgage rate then you must start now. Certainly, your credit score is not the only factor that determines your mortgage loan rate but it is one of the aspects that carries much of the weight.