Updated: Apr 16
Having a great credit score definitely helps in getting that dream home. It is one of the major definitive factors for lenders to approve your mortgage or not.
What is a Credit Score?
According to Investopedia, a credit score is a number that you will get based on your "credit worthiness". It ranges from 300-850 and it will depend on many factors including your debts, the number of your open accounts, and many more. It will basically tell your potential lender if you are able to pay the money that you will be borrowing.
Who Can Measure Your Credit Score?
There are three major bodies that can create your credit report. These credit reporting agencies or CRAs are Equifax, Experian, and TransUnion.
Similarities of the 3 CRAs:
> All of them offer credit monitoring services with a monthly rate the ranges for $ 4.95-24.95
> All are present in more than 24 countries.
> Equifax and Experian are present since the 1800s while the started getting consumer database at around 1988.
> Equifax was hacked last 2017, and information of their 147 million customers were breached. They made their monitoring services free for those who were affected.
> In 2018, Experian was named "World's Most Innovative Companies" by Forbes.
These are their contact details:
Mail: P.O. Box 105788, Atlanta, GA 30348-5788
Phone: 888-EXPERIAN (397-3742)
Mail: P.O. Box 9554, Allen, TX 75013
Mail: P.O. Box 2000, Chester, PA 19016
For more information about these CRAs, read here.
So What's a Good Credit Score?
Each state will have a different average credit score, so your credit score will weigh differently in different states. The average score in California is 717. This figure is the best comparable figure once you have your credit score.
But do not be alarmed if your credit score is a bit far from the average. There are still many ways to go around it despite getting a low credit score.
How Can You Get Your Credit Score?
Did you know that you can ask for your credit report for free once a year? Here's how you will do it.
Ways to Improve Your Credit Score in California
The most practical and easiest way to improve your credit score is by always paying your bills on time. This includes all loans, monthly fees like rent, water, electricity, and of course your credit card bills. You should have at least a good track record for six months.
Do not close unused credit card accounts. Having multiple credit card accounts could help improve your credit utilization ratio. The lower your credit utilization ratio, the better.
Crosscheck your credit reports from different CRAs and make disputes if there are any inaccuracies.
If you plan to open a new credit card just so you can increase your credit limit, this may have a negative effect and be seen as a hard inquiry on your report and will remain as such for at least two years. So open credit card accounts with caution and only when you think that you need it.
If you don't have the time to improve your credit score, you could actually hire services of these credit repair companies who will do the work for you for varying prices.
If you're looking for what not to do, watch this video.
Ready to Buy
After reading this, you are ready to take the first step. Contact a trusted and expert realtor to walk with you through the process! Happy homebuying!
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