Why is the credit score so important? It’s the magic number lenders use to determine what type of loan you qualify for and at what interest loan. The higher the score, the lower the interest rate and the more loan options available to you. You need at least a 600 score to qualify for a government backed loan called FHA. At a 650 score you open up more options like a conventional loan. At a 750 score you coulhave a lower interest rate on a conventional loan than that 650 score.
If your score is below 600 it might be that you have no credit history! That might not make sense to you since you pay for everything on time and in cash but it’s pretty simple to increase your score. Apply for a gas card, for example from Kwik Trip. You can use it to buy your morning coffee! Keep the balance low and pay off the balance in full and on time every month. After 6 months you will have created a credit history and increased your score.
Here’s something for parents with teenagers to consider, add your kids as an authorized signer on one of your credit cards. You don’t even have to give them a card or allow them to use it. The cavaet is that your credit score passes along to them. We did this with our two kids, it enabled our son the ability to buy a car without a co-signer.
One last thing to consider, if you have a credit card you no longer use, don’t close the account. It doesn’t make sense but it will negatively affect your score. Keep the account open but cut the card up!
For more tips for home buying and selling check out my guides on http://www.lizwalker.remax.com.
Liz Walker Real Estate 