We all know that buying a house takes a lot of effort, research and money. However, according to realtor.com, knowing your credit score is probably the most important piece of knowledge you could have.
What’s a good credit score, anyway?
While the maximum score is 850, you don’t need to be as close as you may think. Anything above 760 is considered great. But, you can have a score above 700 and still be OK. But, beware if you score is below that. Anything between 650-699 is considered “fair,” and you may still be OK, but you may run into problems at that point. Talk to your agent about it. However, if your score is below 650, you may be told to do what you can to increase it because it is considered “poor.”
But, what factors into your score?
First and foremost, make sure you are paying your bills – and paying them on time! If you are having trouble doing so, make sure you talk to those companies. If you don’t, and the bills are 30-days late, your score will be affected in a bigger way than you think. Depending on the bill and how late you are, your score could be reduced by 100 points.
Next, take a look at how high your credit card debt is. Simply put, if your debt is 30 percent of your card’s limit or higher, your score will be reduced. Make sure you’re paying off your card – or at least lowering the debt.
Having a card for a long period of time will work in your favor. It shows creditors that you have a good credit history – assuming the debt on the card is low.
Also, take a look at the different types of debt you have. One type of debt may be good, but having several different types of debt will hurt you. If you have a previous mortgage, don’t get a new card or any other loan for a while. Again, the creditors are watching every move your make.
You also shouldn’t open too many accounts at once. As stated earlier, a long credit history is favorable. By opening a new account, the average length of your credit history decreases, which may be detrimental to your score.
The Powell Group encourages you to keep an eye on your score. Many credit card companies are beginning to offer free reports. You can also go to the Credit Karma website to see your scores and what is affecting them – and it really is free to join. Once you know your score and are ready to look for your dream home, we invite you to look at our website to view all of the houses in our area. Our team members are also here to answer all of your housing questions and concerns.
We understand it is a lot of information to take in. But, The Powell Group can help by advising you how you can the home of your dreams.
(Picture used by Wikipedia)