Why is Credit Score So Important? | Sacramento Real Estate Voice

Sacramento Home Buyer Asks About Credit Score

November 9th, 2007 categories: Home Buyer, Sacramento

ImageChef.com - Custom comment codes for MySpace, Hi5, Friendster and more A Sacramento Real Estate Home Buyer recently emailed and asked for an explanation about credit scores and what the numbers mean. The home buyer wanted to know if those numbers really mattered and if anyone really looked at them.

Since we have a new generation of home buyers coming up, its important for you to know that your credit is VERY important and it follows you forever.

When you want to:

buy a car, the car dealer looks at your credit score
get a credit card, the company wants to look at your credit score
buy a house, the Lender will look at your credit score

When you have a higher credit score, you get better interest rates on what you buy. The person giving you credit decides if you are a good risk or not so good.

Credit scores are called FICO scores which was named so by a company called Fair Isaac. There are 3 main credit reporting agencies that keep track of everyone’s credit and they are:

Credit score numbers are assigned to each person based on how you pay your bills. The scores range from 300 to 850. The higher the score, the better risk you are and the better interest rates you get.

Here is what Credit scores mean:

300 “ 519 is a Very Poor ranking
520 “ 619 is a Poor ranking
620 “ 699 is a Good ranking
700 “ 850 is a Very Good ranking

It is said that 3“5 credit cards is all you should have and small balances are better than a zero balance.

There is a myth about inquiries on your credit from mortgage real estate lenders when you are shopping for a house or a car. Although the less inquiries the better, an exception is made when buying a house or a car since within a 30 day period multiple inquiries are treated as one. The reason is that on big ticket items such as cars and houses generally the buyer is looking for the best loan so an exception is made and multiple inquiries within a 30 day period are fine.

The Sacramento Real Estate Home Buyer asked how to increase his credit score

pay your bills on time
keep your balances low on credit cards
pay off revolving credit debt
check your credit reports regularly
correct any errors on your credit report immediately with the credit bureaus

In todays Real Estate market a home buyer wants to make sure that their credit score is as high as possible because this will help keep your payments lower since you will be receiving a better interest rate than a home buyer who has a lower credit score and either cant get a loan or finds that the loan they do get has a very high interest rate. Now, wouldnt you prefer paying less for that car or that house?

I hope this helps answer the question, does my credit score really matter?