Do You Know Your Credit Score- And What It Means?

credit score and real estateMost people are aware that credit scores matter- a “good” score will help you get a better interest rate when buying a house or a car, a “bad” score will result in getting turned down for loan applications- but do you actually know your credit score and where it falls on the scale? This information is important to have, especially when buying a home, so read on to learn how to get your score and what it means.

What is a credit score?

Your FICO credit score is a numerical ranking between 300 and 850 which expresses your creditworthiness (ability to repay a loan) to creditors. The higher your number, the easier it will be for you to get a loan, especially with a low interest rate.

Where can I find my credit score?

While you are entitled to one free credit report from the three major credit bureaus (Equifax, Experian, TransUnion) each year, you are not entitled to a free credit score. You can choose to pay for your score after receiving your credit report, or take the free route which involves a little more effort.

To get a free credit score, you will need to sign up for a credit monitoring service like TransUnion or GoFreeCredit.com. After signing up and receiving your score, you will then have to cancel your service or end up paying the monthly fee.

What does my score mean?

Once you have your credit score, you can get a better idea of how how mortgage lenders will view you. So, how does your FICO score rate?

  • 300-579: This is the bottom end of the credit spectrum, resulting in higher interest rates- not the place you want to be if you’re buying a house. If your score is low, don’t panic. You can take steps to improve it, like making timely payments on a credit card and improving your debt/income ratio.
  • 580-629: This range is still considered poor credit, so you should work on improving your creditworthiness.
  • 630-689: Not great, but not bad either. This credit score range means you should keep working on your finances in order to work your way toward a top notch score.
  • 690-749: Congratulations, you’ve got good credit! This will make it easier for you to get low interest rate loans, especially important when buying a home.
  • 750-850: This is the top tier of credit scores, and if you’re in this group you’ll be reaping the benefits. It should be easy for you to get low interest rates on loans and secure a mortgage lender.

If you are ready to buy a home, knowing your credit score is an important step. To get started with your home buying process, contact The Premier Group! Our Woodstock real estate agents are here to help you navigate the process of buying a house and to find the perfect place to call home in Woodstock, Towne Lake, or Cherokee County.

Photo by Stuart Miles via freedigitalphotos.net