What is Your Credit Score Telling You?

What is Your Credit Score Telling You?

When applying for a job the first document your potential employer asks from you is your resume. In today’s job market a lot of employers are also requesting to see the potential employee’s credit report. This might come as a surprise to you, but your credit report is the most accurate, unbiased representation of your financial stability. It’s the number that represents your ability to pay off your debts. If you want peace of mind, being proactive and avoiding common credit mistakes will be very beneficial to you in the long run.

Having a sound credit report will especially help you when the time comes to fulfill the American dream– owning a home. Even if you make over six figures a year and have stable, consecutive tax returns, having a bad credit score will make it very difficult to get approved for any kind of financing. In the case that you do, the terms and conditions won’t be attractive.

I will outline some key factors to keep in mind, for when you start applying for a mortgage or if you just want some peace of mind:

Have the right score:

Credit scores range from 300 to 850 points. The higher your credit score, the better. On average, most people’s credit scores range between 640 and 720. If you are able to increase your score above a 680, then your chances of obtaining financing will increase dramatically. In addition, the higher the score the more likely you will get a lower interest rate. Your credit score needs to be at least a 620 to qualify for an attractive interest rate and loan terms and conditions. Unless you absolutely need to buy a home and obtain financing, I would recommend waiting until your credit score is at least at a 620. Refinancing into a better loan product in the future when your credit score increases is also a viable option.

home financial group credit history

The credit bureaus have a patented algorithm which calculates your credit scores based on numerous factors. Outlining all the possibilities are endless. If you keep these factors in mind prior to applying for a mortgage, then the chances of a smooth sailing into your new home will be higher.

Avoid multiple credit pulls:

A common mistake people make is applying for a credit card, car financing, and a mortgage within a relatively short time frame. Every time a creditor is evaluating your ability to pay back the loan, your credit will be pulled and your score will be affected.

Use your credit card:

People think that using their credit card will bring down their score. In actuality, if you maintain your credit balances low and pay before the due date, you will increase your credit score. The reason being, is that it shows potential creditors that you are able to use your credit line and pay it on time, and this equates to a higher credit score.
what your credit is telling you home financial group

The credit bureaus have a patented algorithm which calculates your credit scores based on numerous factors. Outlining all the possibilities are endless. If you keep these factors in mind prior to applying for a mortgage, then the chances of a smooth sailing into your new home will be higher.

If you have any general questions about applying for a loan you can leave a comment below or contact us.

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