Before buying a house or other property to rent, future owners should get ready by examining their credit score and credit history.
A credit score is one of the main factors in determining loan terms, if not the primary factor. What a given credit score will qualify an investor for may vary somewhat between lenders, but the importance of credit does not.
One expert told Bankrate.com that having a credit score lower than 740 tends to mean the same interest rate will cost more. This will likely mean paying points in order to keep the rate steady, or accepting a higher rate in order to close the deal.
When checking one’s credit, it is a good idea to look at the history and not just the score. If a credit report has mistakes on it, or lacks information that shows a borrower in a good light, having that data corrected or added may improve the individual’s ability to qualify.
Credit expert Gerri Detweiler wrote that it is also important to avoid taking major actions based on a credit report without consulting someone knowledgeable. While paying off certain debts may seem wise, the circumstances may cause it to appear questionable to lenders. If an individual cannot qualify for acceptable loan terms, then it may be best to wait and strengthen one’s position or find a partner. This may require the reconsideration of decisions such as whether to use a property manager, however.