Introduction
Credit history determines a person’s ability to manage debt in the future. It demonstrates the time, place, and organization of the owed credit and affects a person’s opportunities and chances for applying for the credits or loans. A person with a low credit history is less likely to rent an apartment. Similarly, people with a strong credit history have more chances to negotiate with insurance companies.
Discussion
Maintaining a positive credit history is essential for everyone who dreams of purchasing a house. The most critical part for me is planning to avoid any due credits. Applying for short-term credits after the long ones is unreasonable as some lenders would consider it a decline in the financial situation. A long credit history demonstrating good creditworthiness is the best step to take. One of the important factors that I keep in mind is the total credit limit percentage. The way to avoid any issues is to make sure that my total credit limit percentage is the average rate. If this number will change drastically, I would consider decreasing the limit to 30 percent.
My friend who plans to buy the house should know the importance of credit history. Even when purchased in cash, the seller needs this information to ensure the smoothness of the deal (Murdock, 2021). Before initiating the process, my friend should communicate with the real estate agent to understand the proper housing, mortgage, or financing. For example, higher-rent apartments demand a higher credit score. Thus, my friend should evaluate his credit history and financial opportunities to afford more expensive houses. Lower credit scores limit but do not take all chances to purchase a house. If my friend faces such situations, he needs to find other agents, such as FHA, with suitable rental criteria.
Conclusion
To conclude, credit histories help to understand why banks refuse people, insurance companies inflate policy rates, services are not connected to their services, and global companies do not hire. In the opposite case, people with a good credit history get more trust from the company because it is faster and safer to deal with them. Therefore, people who buy houses on credit should comply with the agreement, make payments on time and maintain high creditworthiness.
Reference
Murdock, C. (2021). What is the role of a credit report in real estate. RentSpree. Web.