Did you know this about your credit?Credit scores are used to assess risk and determine whether a borrower is approved or declined for a mortgage, credit card or some other type of credit. The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau. The higher the score, the more likely the lender will be repaid in a timely manner.
- A higher credit score could help you get a lower interest rate
- You can get a free credit report from all three major bureaus at www.AnnualCreditReport.com.
- Your credit score doesn’t have to be perfect to get a loan … most lenders want buyers to have a minimum of 620 but FHA will consider as low as 500
- Credit utilization, the percentage of credit used compared to what is available, should be kept below 30%; amounts higher could negatively affect your credit score.
- There is a difference between a soft and a hard credit pull. The former doesn’t hurt your score, but the latter can lower it a few points. Try to avoid multiple hard inquiries.
- Credit cards, bank loans, car loans and home loans are considered “good credit” and a mixture of different types is helpful compared to only a car loan.
- Opening new credit accounts after you apply for a mortgage can hurt or even prevent you from being approved on the mortgage.