To answer this question, yes, a mortgage will impact your credit score. The impact depends on how you go about repaying the loan. A mortgage is a long-term loan and usually goes for 15-years plus. Therefore, if you can pay it consistently for, say, five years, then your credit history will shoot up. On the flip side, if you take a mortgage and are inconsistent with the payments, then chances are that you will ruin your credit score. Naturally, this means you will miss out on other helpful loans or have money lent to you at very exorbitant interest rates. Luckily, there are a few measures you can take and avoid finding yourself in such a situation. To help you out here is how to keep your credit history in good shape while servicing a mortgage.
- Get a mortgage at a favorable rate
This may seem quite obvious, but it is not as easy as it sounds. When applying for a mortgage, you need to understand that the bank is looking after its interests, not yours. As such, it will seek to give you the mortgage at the highest rate possible by also including as many charges as possible. For that reason, you need to engage the services of an expert that can negotiate the best rates for you. One such company is Altrua Financial. They are experts in that field and will guarantee that you get the best deal on interest rates. When you have access to affordable mortgages, then it means you stand a better chance of making your payments on time and maintain a good credit history all through. This will also incentivize other lenders to give you loans at affordable rates.
- Plan your finances before taking a mortgage
A mortgage is really just like any other loan, and you need to have a solid plan on how to repay it. Otherwise, you will end up in a situation where a little turbulence in your life could lead to missed payments and ruined credit history. The planning should entail building a substantial portfolio of both passive and active income. For instance, you can put some of your money into blue-chip stocks and fixed income securities. If you are a business person, you can look for ways to expand your business and strengthen its capital base before taking on a mortgage. On the other hand, if you are employed, you can look for ways to build your skills so that you become an on-demand professional no matter the changes in the labor markets. If you take these measures, you are guaranteed stability to pay a mortgage without impacting your credit score.
- Go for a property in a high growth location
When you take a mortgage, you are not just buying a home; you are investing. Therefore, make sure that you only get a mortgage to purchase property in a growth area. This way, even if you cannot pay along the way, you can arrange for the property to be liquidated and benefit from the value appreciation. With this windfall, you can clear your debts and leave your credit score intact.