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 a “good” credit score?
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 credit 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.
What determines my credit score?
There are many factors that play into your credit score, including your payment history, the age of your credit, the types of credit you have, your credit limit and how much you use, the amount of debt you have, and if you have hard inquiries on your credit report.
How can I raise my credit score?
Paying your bills on time, paying more than the minimum payment on credit cards, avoiding opening new lines of credit or canceling old ones, avoiding using more than 30% of your credit limit (if possible), and paying down your debt will boost your credit score. Each of these tips can help boost your credit 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 credit 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! If you’re already confident in your credit score, now is the time to find an agent you trust to assist in your home search.
About the Author
Stephanie Termine relishes the fast-paced, ever changing real estate industry and loves the opportunity to work with many new people. A highly skilled agent with strong negotiation skills, she is motivated to make deals that help clients reach their goals. With a natural ability to lead, she excels at finding a resolution in every situation, no matter how difficult it may seem.