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Credit Score Fundamentals

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What is a credit score?

Your credit score is a three-digit number that shows banks and lenders how likely you are to repay debt. These institutions will use your score to determine whether or not they will approve you for a credit card, mortgage, auto loan, etc. and how much they are willing to lend you.

What is “good” credit?

Generally, a score of 700 or above is considered a “good” score and a score of 800 or above is considered “excellent”. However, depending on your needs and the different loan options available, you can purchase a home with a lower score.


The minimum score for a conventional bank mortgage is about 620+, and you can secure an FHA loan with a score of 500-580. However, the higher your credit score, the more likely you are to be approved for a better loan at a better rate.

Do banks determines my credit score?

No, banks do not determine your score. Scores are created by independent credit bureaus such as Experian, TransUnion and Equifax. They use information gathered from your credit reports such as:

  • Your payment history
  • The age of your credit
  • The types of credit you have
  • Your credit limit & how much you use
  • The amount of debt you have
  • If you have hard inquiries on your credit report

How can I raise my score?

  • Are banks responsible for your credit score?Paying your bills on time
  • Paying more than the minimum
  • Avoiding opening new lines of credit
  • Avoid canceling old lines of credit
  • Avoiding using more than 30% of your credit limit (if possible)
  • Pay down your debt

Each of these tips can help boost your score, but a combination of them will allow you to boost your score much faster.

Apps like Credit Karma will allow you to track your score for free and without penalty, and will even give you tailored advice about what you can do to boost your score.

Understanding and managing your credit score can seem like a daunting task, but with these simple tips, you’ll be sure to boost your score and start the homebuying process!

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