Know Thy Credit Score
If you plan to buy a home any time soon, you have probably considered most of the obvious questions like, what neighborhood you want to live in, how many bedrooms you need, and when you want to move. But before you get too far down the road, you’ll need an answer to an extremely important question: “What is my credit score?”
By now, everyone should know that lenders are more likely to approve your loan and give you a better interest rate if you have a higher credit score. But this has become even more important right now, as lenders everywhere are tightening their standards after the sub-prime shakeout.
Many people dread finding out what their score is, wondering if real or imaginary financial skeletons will come f the proverbial closet. Hit your fear of the unknown head-n and get a copy of the report from a reputable source. No matter how ugly it is, the good news is that although it may take time, you CAN improve your score. (If I can do it – so can you!)
There is still a lot of confusion as to how credit scores are calculated. And to make things more interesting, Fair Isaac Corp. (the namesake for “FICO”) is introducing a new scoring new model, dubbed FICO 08.
Here are my personal “Top 5 Tips” for keeping your score in good standing:
- Pay your bills on time. No surprises here.
- Never, ever let a mortgage, credit card or auto payment go beyond 30 days late. Trust me on this one.
- Keep a mixture of credit accounts open, but don’t carry very large balances on any of them. You will get dinged if your credit cards are at or near the limit.
- When you pay off a credit card balance, it is not always best to close the account. You’ll gain points for having accounts open and in good standing for a long time.
- Get a copy of your report once a year to make sure the information is accurate. (Especially important if your name is John Smith or you have a family member with the same name.)
For more information on credit scores and the new scoring system, here are some excellent articles:
What's In Your Score
Six Ways to Kill Your Credit Score
Importance of Credit Scores
If you find this information helpful, let me know. Whether you’re buying, selling, or just curious about Spokane market information, I'm glad to help.