If you’re looking to rent a new home, get a loan approved or even get hired for a new job, having a good credit score is absolutely necessary. Credit scores will have a direct impact on your mortgage interest rate. This is why frequent credit monitoring to keep your credit score on track could help save you hundreds of dollars.
Here’s what you need to know about credit scores and mortgages.
Credit Scores And Mortgages
Your credit score is a three-digit number that lets loaners know how likely you are to pay off your debt. This ranges from 300 to 850, and is based on a series of transactions known as your credit history. A mortgage is a loan, usually from a bank or other creditors to repay a home loan or car loan.
The word mortgage actually stems from the Latin root "mort," or death, signifying that this debt will follow you to your death. However, it's not as daunting as it sounds. With a higher FICO (NYSE:FICO) credit score, you will get most loans approved and will be able to pay them off easily.
Here are some suggestions on ways you can improve your credit score, thereby improving your chances of getting a mortgage approved.
Keeping Below Your Monthly Credit Limit
Keep well beneath your credit limit by purchasing less with your credit card. This is a simple step that will work on your credit score.
For most banks, the higher your credit score, then the higher your credit limit is. While you do need to continue to make regular purchases to build your credit, do so well within your limit. This may seem limiting, but it will pay off as time goes on.
While the average score in the United States is anywhere from 669 to 699, this varies by age, among other factors. If you’re over the age of 70, it's likely your credit score is around 730, and if you’re 20 or under, your credit score is most likely 631. While this is not a direct correlation of age and credit score quality, there seems to be a general trend that the higher your age group, then the higher your credit score.
One important fact to know about your credit score is that it will automatically clean itself over time. Negative information on your credit report will only cling on for seven years, then it washes away leaving you a clean slate.
Using An Online Bank
Online banks such as MoneyLion can actually help improve your credit score.
MoneyLion allows every user with access to a low-interest 5.99% APR loan to keep their savings progress on track. This includes users with lower credit scores. These loans are accessible at anytime as a Plus member, without the need to reapply. Not only will this loan be deposited in seconds, but it has been proven by MoneyLion to raise members’ credit.
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