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Five Methods to Check Your Credit Score: A Guide from Your Preferred REALTOR®
Dated: July 11 2023
As a REALTOR and investor, finance and credit-related topics are daily conversations for me. Part of my job to help people understand the importance of their credit score, especially when it comes to major financial decisions such as buying a house. Your credit score is a major factor in determining your eligibility for loans and the interest rates you will be offered. In this article, I will describe five methods for determining your credit score and provide examples of what constitutes a high score, as well as the minimum score needed to purchase a home. In addition, I will discuss the average credit score of homebuyers and the effect of differences in credit scores on interest rates.
1. Credit Card Companies and Banks: Some may offer their consumers access to their credit scores. Some financial institutions include credit score monitoring services as an account benefit. Check with your bank or credit card issuer to determine if they offer this service. It is a convenient method to regularly monitor your credit score and remain informed of any changes.
2. Credit Reporting Agencies: Experian, Equifax, and TransUnion are the three primary credit reporting agencies that maintain credit reports and scores for individuals. Each of these agencies will provide you with a credit report upon request. Federal law permits you to obtain a complimentary copy of your credit report annually from AnnualCreditReport.com, a government-authorized centralized website. Examining your credit reports can provide you with a complete picture of your credit history.
3. Credit Monitoring Services: Several online platforms offer services that give you access to your credit score and report. Credit alerts, identity theft protection, and credit score simulators are common additional features provided by these services. Credit Karma, Experian CreditWorks, and myFICO are three well-known credit monitoring services.
4. Fintech applications: With the rise of financial technology, a variety of mobile applications that enable convenient credit score monitoring have emerged. To securely access your credit information, these applications usually require you to link your credit accounts or provide your social security number. Credit Sesame, Mint, and WalletHub are examples of well-known fintech applications for checking credit scores.
5. Credit Counseling Agencies: Credit counseling agencies can be a valuable resource if you are experiencing credit difficulties or seeking expert advice on managing your credit. These organizations provide credit counseling services, which incorporate credit score analysis. They can assist you in comprehending the factors influencing your credit score and offer advice on how to improve it. Choose a credit counseling agency that is reputable and non-profit.
Now that we've discussed how to check your credit score, let's discuss what a decent score is and the minimum score needed to purchase a home. A decent credit score for purchasing a home is typically between the high 600s and 700s. A credit score above this range is regarded as exceptional and assists applicants in obtaining the best mortgage rates. However, dependent on the type of loan, it is possible to purchase a home with a credit score as low as 500.
Lenders pay close attention to credit scores because they indicate a borrower's fiscal responsibility and influence the interest rates they are eligible for. Even a minor difference in your credit score can result in substantial changes to your interest rate. A rate that is just 0.25% to 0.5% lower due to a higher credit score, for instance, can result in thousands of dollars in savings over the life of a loan.
On average, the credit score of home buyers varies based on a variety of factors, including loan type and market conditions. Experian reports that the majority of consumers have credit scores between 600 and 750. It is essential to note, however, that credit scores alone do not determine loan approval. When evaluating loan applications, lenders consider additional factors such as income, employment history, obligations, and debt-to-income ratio.
In conclusion, it is essential to monitor your credit score frequently, particularly if you intend to purchase a home or apply for a mortgage. By utilizing the aforementioned five methods, you can monitor your credit health and, if necessary, take measures to improve your score. Remember that a higher credit score improves your prospects of securing favorable loan terms and lower interest rates, which could save you a substantial amount of money over time.
REALTOR with Crown Realty
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