About Credit Scores, What to know

Before you buy a house you have to know about credit scores. All lenders will pull your credit. Therefore, you should know what your credit score is before you ask about becoming prequalified to purchase a home. Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage. Furthermore, there are several tools that you can use to pull your own credit report. For example, annualcreditreport.com is a free tool used buy banks and consumers to look at credit reports. Federal law allows you to pull your credit report for free once every 12 months. For more information on what to know about credit scores, read this article from credit.com. Let’s dive in to what to know about credit scores. The following factors affect your score:

Your payment history.

Did you pay your credit card bills on time? Bankruptcy filing, liens, and collection activity also affect your history.

How much you owe and where.

If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, spreading debt among several accounts can help you avoid approaching the maximum on any individual credit line.

The length of your credit history.

In general, the longer an account has been open, the better.

How much new credit you have.

New credit—whether in the form of installment plans or new credit cards—is considered more risky, even if you pay down the debt promptly.

The types of credit you use.

Generally, it’s desirable to have more than one type of credit—such as installment loans, credit cards, and a mortgage.

Thanks for reading about credit scores. Learn how to improve your credit score here.

National Association of REALTORS®