Getting Your Credit In Order

The process of buying a house doesn’t begin when you walk through the door of an open house, or set up those first showings with a Realtor. You need to begin long before that. So brace yourself, this is BIG stuff! Buying a house in today’s new market is all about your credit and your credit scores.

Good credit will open doors, bad credit will close them. A quarter of American’s have a low credit score, defined as 599 or lower. A great credit score is 800 or above. This is partially due to the down market, economy, tighter access to credit, and the fact that money has just been harder to come by, so credit card spending is up. When lenders look at your credit report, it tells them alot about you. It is a complete history about your financial activities. It lists your creditors, when you opened bank accounts, what you owe, and to whom. It also details your credit limits, and history, including late payments, and any other negative information.

Credit scoring factors in your income, debt, and your employment history. The past six to twelve months are examined first, so it is critical to keep current with your bills. The most popular type of score is the FICO.

credit

Below you can see the FICO score break down:

760-850 Acceptable risk. This will give you the best rates.
675-759 Generally acceptable. Maybe not get the lowest rates.
620-674 Motivates a closer look at potential risk and a higher interest rate.
500-619 The lowest score may keep those attractive low rates out of reach, and possibly no loan at all at this time.
Below 500 Falls into the sublending category.

Here are the top three credit report companies.
www.equifax.com
www.experian.com
www.transunion.com

If you get your credit report and it is less than perfect, you can start by managing your credit responsibly over time by following these basic steps:

Stay current-pay bills on time.
Get help-see a credit counselor if you are unable to manage.
Always make more than the minimum payments on your revolving credit.
Maintain low balances-pay those balances down!
Don’t move it, lose it– pay off the debt, don’t just move it to a new card.

Once you have achieved these goals and get pre-approved for a loan, you will then be a much stronger buyer, and you will be more comfortable in the price range you are looking. Once you find that “Dream Home”, your offer to the seller will be that much stronger with being pre-approved. Happy house hunting!

Claude Wenaas About Claude Wenaas

I have been involed in real estate for many years, and is my full time job. I truly enjoy it. I also am an avid runner, do long distance bike riding, cross counrty skiing, snow shoeing, I am very involved with activities in my community. I am also licensed in both Minnesota/Wisconsin.

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