What does your credit score mean?

So you want to buy a home but aren’t sure if you will qualify. You may not even know what good and bad scores are. Let’s look at what determines a good and a bad credit score.

 Credit scores range from 300-to 850. A score of 620 and below are regarded as a bad credit score. It is important to note that what qualifies as a bad score can be subjective depending on the type of lender or creditor who may be issuing the credit. 

For example, for a home mortgage, Federal mortgage companies Fannie Mae and Freddie Mac consider a 620 score and below a bad credit score. 

They will still work with you, but only if your score is 620 or above, and it will cost you because your low score makes you a greater risk. Federal Housing Administration (FHA) will help people with lower scores, but other lenders are not so accommodating. 

They will not lend to you if you have a bad credit score. The risk of defaulting on the loan is too significant to justify issuing the loan and perhaps making any profit. 

 So, let’s take a closer look at a bad credit score and see what it says to potential lenders. 300 to 499- Your credit scores are terrible. You have some work to do, which may take a while, but things can improve. 500 to 579-Your credit scores are bad. 

You will have very few options to obtain credit, and if you do find them, the costs in interest and upfront fees will be high.  

580 to 619-Not too good, but not too bad. You are on the borderline and will have a hard time finding a lender willing to lend to you, the risk is too significant, and the interest rates would be high. 

 620 to 679-This is the average credit score. In the minimum score range, you can get fair mortgage terms. You are just a few steps below having a good credit score, and a few reasonable steps could improve your score to the following range. 

 680 to 719-This is a good credit score. You can get good terms from lenders. If you shop for a home, you will find good words from lenders. You will likely be able to refinance to better mortgage terms if your current times are not the best. 

 720 and up-You have excellent credit. Your score is where you want it to be for all major purchases. Do you need help repairing your credit? Credit Repair is legal under the FCRA; call Real Credit Deal today for your free credit consultation.

It is always the right time to clean up your credit reports. Your credit report is the recorded history of your credit behavior and a significant factor in your financial stability. Today, take action to make sure your credit report is clean and protect your financial future.