Special offer

HOW IMPORTANT IS A GOOD CREDIT SCORE?

By
Real Estate Agent with Downing-Frye Realty

Your credit history involves a variety of things and is basically a total history of your financial life. It includes, but is not limited to, where you live and how long you've lived there; whether you rent or own; any account you have opened, including credit and debit cards; all the information associated with those accounts, such as your payment history, how you've paid those bills and what company you've paid them to. All this information is involved in determing your credit worthyness and your or Fair Issac, FICO or Beacon score.

Your credit score is one of the most important things in your life and should be carefully attended to, because in actuality, you will live and die by that score in the credit world. The three reporting agencies, Trans Union, Experian and EquiFax mathmatically calculate your score according to all of the information above and more. They put all of this information together, crunch numbers according to the formula and bingo, your score is generated. That number ranges from 300 to 850, with the average credit score being 680 or higher. A truly great credit score would be 750 or higher.

When shopping for a mortgage, the first thing that your mortgage broker or lender will do is pull your credit score. Where that number falls, will determine how much money that lender will be willing to give to you, what type of loan you'll receive, as well as points charged, fees paid and naturally the interest rate. Your score will make a huge difference with regard to those things and can make those item vary greatly.

To get and maintain the best score possible, it is essential that you monitor that score and keep up to date with everything. Payments on loans, credit cards, etc. need to be on time. It is also important to monitor the amount of credit that you take out from different sources, because it all relates to your income-to-debt ratio, something that all loan institutions look carefully at. If you don't know your credit score, go get one at: http://www.annualcreditreport.com/. This will give you access to your score through the three reporting agencies, so that you can take the appropriate action if your score is low or needs repair. Realistically, you should monitor your score at least twice a year. 

 

Comments (0)