The most important piece of a person’s financial life is their credit score. Whether buying a new South Central Vermont home, applying for a job, refinancing, paying off debt, or getting utility service, your credit score will drive the outcome. One would think that Americans are all aware of what the scores are measuring and what factors play a part. But, most Americans do not know enough about the three digit rating or what is involved. Do not let these credit score myths get in your way when preparing for the purchase of your next South Central Vermont home.
Myth: Checking a credit report can either damage or lower your score.
A credit report can be conducted by you or someone like an employer as many times as desired with out having any impact on your credit score. Reviewing your credit report will never change your credit score. Just make sure that reports are retrieved through the bureaus or a legitimate score seller.
Myth: Age, sex, and income are factors that affect your score.
None of this information plays a role in determining your score. A higher income may make it easier to pay off debts, but income and net worth have no impact of credit scores.
If you are buying Rutland VT real estate, you will want to know what your credit score is. Lenders look at your credit history, debt-to-income ratio and your credit score when qualifying you for a home loan. Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect yourscore:
1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use. Generally, it’s desirable to have more than one type of credit – installment loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your credit score, visit www.myfico.com.
Are you thinking of buying Rutland VT real estate. Learn about the home buying process at ISellVermontRealEstate.com or give me a call for more personal service, 800-659-1819 .
Reprinted from Realtor Magazine with permission of the National Association of Realtors.