Boston Real Estate in 2021
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Mortgage interest rates are near historic lows. Yet if you want to take advantage of those rates, check your credit score first.
That three-digit number determines whether you can get a mortgage, the type of loan you’ll get, what you’ll pay in interest, and potentially how much money you need for a down payment. In this hot downtown Boston real estate market, that could make difference in your success, experts say.
The importance of credit score and buying a Boston condo
Credit scores range from 300 to 850. A good score is 670 to 739, very good is 740 to 799, and 800 and up is considered excellent, according to FICO, a leading credit-scoring company.
Homebuyers who took out mortgages in the fourth quarter of 2020 had a median score of 786, according to the Federal Reserve Bank of New York.
Boston condo buyers check your credit history
You are allowed one free credit report a year from the three main credit-scoring companies: Experian, Equifax and TransUnion. You can reach out to each directly or you can access them through annualcreditreport.com.
Not only should you know your score, but you should also make sure there are no mistakes or unintended skeletons in your closet, like a missed payment you forgot about.
Pulling your report before you apply for a mortgage or preapproval, ideally a few months in advance, will give you time to correct any issue
If you’re looking to refinance or buy a Beacon Hill Condo, or even rent an apartment, potential lenders and owners will be checking your credit scores. And if those scores are being verified, chances are they are going down.
Yes, you read that correctly. Each time a credit score is pulled from one of the three credit bureaus as part of a loan application, it can decline by as much as 20 points or more.
How to build up your credit
Pay bills on time
Late or missed payments can knock down your score.
The easiest way to avoid that is to set up automated payments for your bills, Daugs said.
Get a credit-builder loan
Some community banks and credit unions offer credit-building loans, which are designed to help the holder build credit as they make payments.
You’ll pay interest, although some lenders may reimburse the costs after the loan is repaid.
