CREDIT: KNOW THE SCORE
Credit scoring has an enormous impact on your financial picture. It can mean the difference between getting a good interest rate on your mortgage loan, or whether you even qualify at all.
Credit scoring seeks to quantify how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future.
1.) Payment History (35%) – Paying debt on time and in full has a positive impact. Late payment, judgments and charge offs have a negative impact. Missing a high payment has a greater impact than missing a low payment.
2.) Outstanding Credit Balances (30%) – The ratio marking the difference between outstanding balance and available credit. You should try to keep a balance below 75% of available credit limit.
3.) Credit History (15%) – The length of time a particular credit line has been established. The longer the better.
4.) Type of Credit (10%) – A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debit from credit cards only.
5.) Inquiries (10%) – The number of inquiries that have been made on a consumers credit history within a six-month period. Each hard inquiry can cost from 2 to 50 points on a credit score. Maximum is 10 in a six-month period.
Credit score is today’s snapshot of your credit profile. Score can fluctuate dramatically within a week depending on activities.
720 and up … Wonderful! You are at the top of the best rates and terms offered to you.
700-719 …… Excellent! You are a very desirable borrower.
680-699 …… Good Credit! You should be in good shape to buy.
660-679 …… OK Credit! Don’t look for other exceptions.
640-659 …… Borderline! OK if everything else is strong.
620-639 …… Weak! The rest of your life must be perfect.
600-619 …… Difficult! Needs some work or a special program.
Below 600 … Trouble! Try to fix up your credit.
Shana Fellows is an EXIT Sarnia Real Estate agent who helps buyers and sellers with all their Sarnia Real Estate needs. She’s dedicated to finding your next Sarnia home within the Sarnia Real Estate Market.
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