The use of credit card is a talked about subject. People are always cautious of their expenses with their credit cards to get a higher credit score and lower interest rates for the future. The reason people choose credit card is pretty simple, it gives them a lot of convenience as they can pay the amount at the end of every month.
If you are wondering what mortgage applications have to do with credit cards, we should tell you that your mortgage applications have quite a link to your credit card usage and this is just what we will discuss in this article today.
Just like debt collectors in Singapore, mortgage lenders also look for your credit history to approve your application. If you have a high credit score then just like you get lower interest rates, you may also have better chances of getting your mortgage application approved.
Lenders also look at the time you take in paying for your credit cards. Timing is very essential with mortgage payments because if you’re as late as just one day, there can be consequences that you will have to bear. If you pay your credit bills on time, your credit score will improve and hence you chances of a successful application. Be smart and wise in managing your credit cards.
Difference on loan types
Credit Cards are unsecured loans. One may have to pay more if they delay the payments but there is no strictness due to the fact that there is no loan security. However, mortgage loans are secured loans firstly because they are generally larger amounts and secondly, it keeps the borrower dedicated to pay the dues on time or else the property may be setup for auction after a foreclosure notice from the bank.
Despite of being a major difference in the loan type, lenders always take into account how you react if you have more loans to pay. They check how dedicated the borrower is when it comes to paying secured loans in comparison to unsecured loans. We recommend you should always clear your unsecured payments and not just pay to increase your credit score.
Don’t want a credit card?
You might be wondering that since it could be a tough job getting your application approved with a credit card so why not avoid a credit card. Well, it doesn’t go in your favor either. If you haven’t had a credit card before, the lender will not be able to judge how punctual you might be with your bill payments. Hence having a credit card and a good credit score is vital for your cause. If your sole reason for not having a credit card is the above, read a post that we have shared on debt management tips.
The final verdict
To cut the discussion short, the relation between your credit card and mortgage application is your credit score. Debt collectors and mortgage lenders are very particular about your bill payments so we leave you with some tips and tricks that will help you improve your credit score which will in turn be helpful to let you succeed with your mortgage application.
- Be honest with your credit history in front of your mortgage lender.
- Be punctual with your credit card payments.
- Always spend less than 30% of your credit limit.
- Pay out any outstanding due before submitting the mortgage application.