Learn Simple Facts about Credit before Buying
Thinking about buying a home at the Lake of the Ozarks? Your Favorite Real Estate Team has the best real estate agents at the Lake of the Ozarks, and we are here to help you with all your questions about buying a new home. One big factor of the home buying process is getting approved for a home loan, which can be dependent on your credit score. Today we are talking about credit scores and general information that could help you better understand your numbers. (We are not financial advisors, so keep in mind that it is best to consult with a professional before making financial decisions.)
What is a Credit Score?
Credit scores are calculated numbers that help lenders understand your credit history and how financially responsible you are. This number is calculated by taking several financial factors into consideration including the length of your credit history, your utilization of credit, kind of credit, new applications for credit, and timeliness of payments.
Credit Factors Defined
Payment History: Your payment history keeps track of how often you pay your bills on time. You receive negative marks for paying bills late or letting a bill go to collections.
Credit Mix: This is determined by what kind of credit accounts you have... car loan, credit card, student loan, mortgage, etc. A more diverse portfolio shows that you can handle multiple types of accounts.
New Credit: Each time you apply for something that requires a hard credit check, it is recorded on your credit report. More applications and new credit accounts can hurt your credit.
Credit History Length: The average amount of time of your credit history can show the stability of your financial situation to lenders. This is calculated from the oldest credit account as well as the newest.
Credit Utilization: This is a calculation of how much of your available credit you use. If you have a credit card limit of $10,000 and have $5,000 of debt on the card, then your utilization is 50%. A good goal is to have less than 30% utilization.
Credit scores are graded on a scale of 300-850. Check out the scale below to get a general idea from Experian of what scores could be considered fair, good, or excellent.
What is a Good Score?
Credit scores are graded on a scale of 300-850. Check out the scale below to get a general idea from Experian of what scores could be considered fair, good, or excellent.
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Very Poor: 300-579
How Do I Check My Credit?
There are several free ways to check your credit and keep an eye on how you're doing. One popular third-party example is Credit Karma. Be careful about relying too heavily on this number, however, as it can often be inaccurate up to several points.
Some banks and credit card companies will offer free credit checks to customers any time they want through an online login.
There are three credit bureaus in the United States, and Americans are entitled to receive a free credit report from each of these bureaus once every 12 months. A great tip to help keep an eye on your credit throughout the year is to request one every four months.
If you are considering buying a home at the Lake, it might be a good idea to take a look at your credit score to see if it needs work before you apply for a mortgage. Once you're ready to start looking for a home, contact the best real estate team at the Lake of the Ozarks... Your Favorite Real Estate Team!
CONTACT ED SCHMIDT FOR ALL YOUR LAKE OF THE OZARK REAL ESTATE NEEDS
Ed Schmidt, REALTOR
752 Bagnell Dam Blvd. Suite A
Lake Ozarks, Mo 65049
Phone: 573-240-9052
Comments
Post a Comment