You know that your credit is important. You know that your credit score affects your ability to purchase a home or anything else with credit.. Let’s talk credit and learn about what you need to know to be in the best position to purchase a home.
Let’s talk more about credit
The three credit agencies that report credit are Trans-union, Equifax, and Experian. When you apply for credit these are the three that report a score. Every industry has its own scoring model that they use to determine if you are suitable to receive credit. Some of the different scoring models are for mortgage, credit card, automobile and educational score. The credit score that you receive when you apply for a home loan will be the lowest score. That is because you will, more than likely, be taking out the largest loan and the lender has the largest risk. Your credit score can be as much as sixty points lower than what is reported to credit CARMA, when you apply for a mortgage. There is nothing that you did wrong to have the lower score, it is just the way of credit.
Let’s talk more credit. What is considered a good credit score that will get you the best rate for your mortgage? That magic number is: 740 or above. With at least a 740 score, you can be assured that you have the score needed to be able to negotiate the est rate on your mortgage.
Tips for great credit
What are some tips that you should keep in mind to have the best possible credit score?
- Make sure that you pay your bills on time.
- Do not co-sign on loans for others.
- Do not close old accounts.
- Do not open new accounts.
- Debt management and credit counselors DO negatively affect your credit. Do NOT do!
Myths about credit
Here are some common myths about credit. Opening up new accounts will help your score. This is only true if you do not have credit. Paying off old delinquencies on your credit report will remove them from your report. Old delinquencies will drop off your credit report only after seven years. Credit agencies check to see how much money you have in your checking and savings accounts. This is not true and how much money you have does not affect your credit score. Now you have information to help you best manage your credit. Contact Dave Armstrong with Elevations Credit Union when you are ready to apply for your home loan. 970-388-3903 or dave.armstrong@eleationscu.com