If you have been laid off from a job, fell ill, had your identity stolen, or dealt with an extended family emergency, getting a home loan can be difficult.
Even if you have always been a responsible bill payer, these unforeseen circumstances can set you back more than you hope. Let us explain how your credit score can work against you, even if it isn’t your fault.
What’s The Deal?
Why is your credit score the same as someone with no responsibilities? Any of the above-mentioned reasons can be the cause of the credit score you are facing now. It doesn’t take long for your score to slip when you are unable to pay your bills.
Unfortunately, it takes a lot longer to increase your score than to drop it. That is why it is essential to keep a good eye on your credit. If something looks fishy, take action immediately! Do not miss out on your dream home due to ruined credit!
Don’t Judge a Book by Its Cover
Envision two people walking into a bank with the same credit score. The difference lies in the way they achieved that number.
‘Person One’ took out a bunch of credit cards and never paid anything back in full or on time. He now wants a home loan, so he’s slowly working on building his score.
‘Person Two’ is an extremely responsible person when it comes to money. She has always paid on time and never takes more money than what she can pay back. She was unfortunately laid off from her job, so she spent her entire life savings trying to stay on top of bills but still fell behind before going back to work.
It’s Black And White for Lenders
As a good and reasonable human being, you probably think the second person should get the loan over the first person. However, lenders only see a number. They may listen to your back story, but it probably won’t make a difference on their final decision.
Most banks would turn down both offers for a loan. The number, which is all lender care about, doesn’t always give a clear picture of why a person has the credit score they have. The bank can’t take a chance on loaning to a customer who could potentially not pay them back. Due to this, the banks unfortunately miss out on working with good clients!
What to Walk Away With
Being seen as a number can help or hurt you. It’s unfortunate that it doesn’t always accurately portray the person you are, but that’s the way it works. Instead of sitting back and letting it happen, get to work improving your score.
Have you struggled to improve your score? What happened, and how did you fix it? Tell us in the comments below. Get in touch with our credit specialists to get started on bringing that number back up today.