How Important Is My Credit Score?
While you can still buy a home with a lower credit score, especially if you are trying for a USDA loan, your credit score can still vastly improve your ability to get the loan you desire. Your credit score can affect your mortgage rate, it can affect your monthly payments, and in some cases can even affect if you can get a home at all. That's how important your credit score is. Here are a few things to keep in mind as you think about your credit score.
What Is A Credit Score?
This number that ranges from 300-850 paints a financial picture to show the likelihood of your ability to pay your loan back. The higher the score, the more chances you have of getting a better deal on your mortgage. The credit score is generally referred to as a FICO score, which stands for Fair, Isaac, and Company.
While it's a mystery to everyone to know what exactly affects your credit score, and how to actually boost it, here are a few things that your score takes into account:
Payment History – Have you made timely payments on your debt in the past?
Amounts Owed – How many lines of credit do you have, and how high is the balance on each?
The length of Credit History – How long have you been using credit?
New Credit – Have you opened several credit accounts recently?
Types of Credit Used – What combination of credit cards, retail accounts, installment loans, and mortgages do you have?
What Credit Score Should I Have?
Keep in mind that your credit score doesn't just affect your ability to get a home. It can also affect your credit card, a personal loan, and more. You also will need to remember that there is no solid rule in regards to a credit score. Just because you have a low score doesn't mean you can't get a good deal on a home. This is a general idea to keep in mind as your getting your finances in order and preparing to buy a home:
Excellent (760-850) – Your credit score will have no impact on your interest rate. You will likely be offered the lowest rate available.
This number that ranges from 300-850 paints a financial picture to show the likelihood of your ability to pay your loan back. The higher the score, the more chances you have of getting a better deal on your mortgage. The credit score is generally referred to as a FICO score, which stands for Fair, Isaac, and Company.
While it's a mystery to everyone to know what exactly affects your credit score, and how to actually boost it, here are a few things that your score takes into account:
Payment History – Have you made timely payments on your debt in the past?
Amounts Owed – How many lines of credit do you have, and how high is the balance on each?
The length of Credit History – How long have you been using credit?
New Credit – Have you opened several credit accounts recently?
Types of Credit Used – What combination of credit cards, retail accounts, installment loans, and mortgages do you have?
What Credit Score Should I Have?
Keep in mind that your credit score doesn't just affect your ability to get a home. It can also affect your credit card, a personal loan, and more. You also will need to remember that there is no solid rule in regards to a credit score. Just because you have a low score doesn't mean you can't get a good deal on a home. This is a general idea to keep in mind as your getting your finances in order and preparing to buy a home:
Excellent (760-850) – Your credit score will have no impact on your interest rate. You will likely be offered the lowest rate available.
Very good (700-760) – Your credit score may have a minimal impact on your interest rate. You could be offered interest rates 0.25% higher than the lowest available.
Good (660-699) – Your credit score may have a small impact on your interest rate. This means rates up to .5% higher than the lowest available are possible.
Moderate (620-660) – Your credit score will affect your interest rate. Be prepared for rates up to 1.5% higher than the lowest available.
Poor (580-620) – Your credit score is going to seriously affect your interest rates. You may be hit with rates 2-4% higher than the lowest available.
Very Poor (500-580) – This is trouble. If you are offered a mortgage, you’ll be paying some very high rates.
If you're afraid that you can't get a home with your current credit score, there are a few things you can do. First, you can speak with a financial advisor to learn how you can boost that credit score, and make necessary changes in your lifestyle to achieve those goals. Next, you can start working with a mortgage company to find out exactly what you qualify for and what type of house you can afford. After you've spoken with a mortgage company, it's time to talk to the best real estate agent in Colorado Springs. I can help you find a home in your budget, and walk you through the entire home buying process. It's okay to have questions, and not know exactly what you're doing when looking for a Colorado Springs home. I have 25 years of experience, and I would love to show you how easy it can be to find your dream home. Visit my website to learn more!
Mike@BuyWithMike.com
Mike MacGuire
Colorado Springs Real Estate Agent
The MacGuire Team
6760 Corporate Dr
Ste 300
Colorado Springs, CO 80919
719-536-4324 or 719-660-6793
Mike@BuyWithMike.com
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