These are the things you need to know about your credit scores!
You’re probably aware that your credit score is incredibly important.
If you’re thinking of buying a new place (or even just refinancing your existing one), it will affect your ability to qualify for a loan and the interest rate you get (which affects your long-term costs).
Do you want to ensure your credit score demonstrates your good financial judgment? Here’s what you need to know:
There are several types of credit scores. Credit bureaus typically offer two types of scores: the FICO score and the VantageScore. Not all lenders use the same one, so be sure you know which one your loan officer will be using before moving forward with an application.
A score consists of five factors. Here are the five things that make up your score:
- Payment History: Do you pay your bills on time?
- Credit History: How long have you had credit to your name?
- Credit Utilization: How much of your credit lines are you using?
- Credit Mix: How many types of credit do you have?
- Credit Inquiries: How often has your credit report been pulled?
Improving in any of these areas can help increase your score over time.
Scores fall into a few different ranges. They typically run from 300 to 850, but there are labeled categories within that larger range. If your FICO score is in the 800 to 850 range, that’s considered "exceptional." From 670 to 799, it's "good" or "very good." If it’s 580 to 669, it's "fair." You're considered to have "poor" credit with a score of 579 or lower.
If your score is considered "fair" or "poor," it can help to take steps to improve it before applying for a loan.
Get in touch if you’re ready to begin looking for your next home.