Qualifying for the Best Fixed-Rate Mortgages
Mortgage lenders look at a number of factors when deciding what interest rates to charge borrowers. None of these factors though, are as important as the credit score.
Borrowers receive high credit scores when they have a history of paying their bills on time and properly managing their money. They end up with low scores when they miss car payments, forget to send in their credit-card bills or, worst of all, declare bankruptcy.
Borrowers with bad credit scores will suffer when taking out fixed-rate mortgages. Lenders will charge them higher interest rates. This means that they'll have to make higher mortgage payments each month.
Unfortunately, there is no easy solution for borrowers with bad credit histories. To improve their scores, they'll have to build a new credit history. They'll have to show lenders that they can pay their bills on time and that they can manage credit without running up huge debts.
Because this does take time, it might make sense for borrowers to wait a year or two before applying for a home loan. Having a good credit score is the only way for homeowners to guarantee that they'll be paying as little as possible for their fixed-rate mortgages.