If you’re in the market for a new home, you might be wondering if purchasing a property will help or hurt your credit score. The answer, fortunately, is that buying a home can have a positive impact on your credit—but only if you handle your finances responsibly. Here are three ways that owning a home can help improve your credit rating.
1. You’ll establish a good payment history.
One of the most important factors in calculating your credit score is your payment history. That’s why paying your mortgage on time each month can give your score a nice boost. As long as you keep up with your payments and don’t fall behind, you’ll be in good shape.
2. You’ll build equity in your home.
Another benefit of owning a home is that you’ll gradually build equity in the property as you make mortgage payments and the value of your home appreciates. Equity is viewed as being financially responsible.
3. You’ll have more stability than if you’re renting.
Lenders like to see that borrowers have financial stability and one way to demonstrate this is by owning a home instead of renting. When you own a home, it shows that you’re serious about staying in one place for a longer period of time. If you’re thinking about buying a home, there are plenty of reasons to do so—including the fact that it can help improve your credit score. Of course, it’s important to remember that not all debt is created equal, and taking on too much debt can actually hurt your credit score rather than help it. So be sure to talk to a financial advisor before making any big decisions—but rest assured that buying a home is one way to give your credit rating an extra boost!
