Understanding and Improving Your Credit Score

  If you are about to become a first-time homebuyer, you are sure to have heard and read a lotabout the importance of having a good credit score. Your credit health plays a big role in yourhome-buying future. Strong credit health can help you in qualifying for loans with low interestrates which can save you hundreds in the long run. So, you may be wondering, what exactly is acredit score? How is it determined? What can you do to improve it? We have got the answers foryou! What is a credit score? Your credit score is a three-digit number that sums up the information in your credit report.Banks and lenders use this metric see how likely you are to repay debt. These institutions will useyour score to determine whether they will approve you or not for a credit card, mortgage, autoloan, 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 isconsidered “excellent”. However, depending on your needs and the different loan optionsavailable, you can purchase a home with a lower score. The minimum credit score for aconventional bank mortgage is about 620+, and you can secure an FHA loan with a score of 580.However, the higher your credit score, the more likely you are to be approved for a better loan ata better rate. What determines my credit score? There are many factors that play into your credit score, including your payment history, the ageof your credit, the types of credit you have (revolving credit and installment loans), your creditlimit and how much you use, the amount of debt you have, and if you have hard inquiries on yourcredit report. How can I raise my credit score? Paying your bills on time, paying more than the minimum payment on credit cards, avoidingopening new lines of credit or canceling old ones, avoiding using more than 30% of your creditlimit (if possible), and paying down your debt will boost your credit score. Each of these tips canhelp boost your credit score, but a combination of them will allow you to boost your score muchfaster. Apps like Credit Karma will allow you to track your credit score for free and withoutpenalty 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 difficult task, but with thesesimple tips, you will be sure to boost your score and help start the homebuying process! So, if you feel your credit isn't good enough don't let that discourage you - buying a home takestime and planning. The most important step to the path of homeownership is the first step, andthat's getting started. I would love to help you reach your goal of owning a home. If you have questions or would like more information about credit and how it can affect yourpurchase, please email me at bettyriveron@gmail.com or call me at (813) 618-7973.