If you're thinking about buying a home, you need to be aware of your credit because it can affect your ability to qualify for a mortgage. Your credit score – also known as your FICO® score – is an important part of a lender's credit decision, influencing the credit that's made available to you and the terms you're offered. Scores range from 300 (worst) to 850 (best) and are based on your debt, your ability to repay your debts on time, and how you use and manage your credit. Learn more about how you're scored.
Scores above 700 are generally considered good with most borrowers' credit scores falling in this range – the average being about 725. Borrowers with scores below the mid-600s may have difficulty obtaining a loan and will experience higher interest rates and /or larger down payment requirements.
Don't despair if your credit is low, there are ways to repair your credit and improve your score. As Fair Isaac's points out, the best advice for rebuilding credit is to manage it responsibly over time. But there are ways you can start to improve it today, following these three steps:
- Check Your Credit Report Annually
- Set up Payment Reminders
- Reduce the Amount of Debt You Owe
Visit CreditSmart®, our online financial literacy program, to learn more about building, maintaining and improving your credit; managing your money; and being a responsible homeowner.
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