Understanding the Importance of Your FICO Score

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I'm willing to guess you have a general idea of how important your credit score is, especially if you're looking to buy a home. But do you know how it's calculated? Or how to manage and control it?

If your answer is no, you're not alone. When people try to by a home, many run into credit problems they didn't know they had. Today, I'll share some helpful tips that will help make your buying experience as smooth as possible.

Let's begin by talking about your FICO score, which is calculated using several aspects of your credit data. This includes your payment history, amounts owed, length of credit history, new credit, and types of credit used.

The resulting credit score ranges anywhere from 300 to 850. A score of 720 or higher makes you a premium buyer, which is your goal.

So the question becomes: how do I become a premium buyer?

It all starts with controlling your FICO - successfully doing so will allow you to get a better interest rate, and get a leg up on the competition.

The first step is to speak with a lender about your credit score. Whether you are looking to build a house now or months down the road, you need to speak with an expert so you know where your credit stands and how to improve it should you need to.

Most of the time, credit issues stem from the borrower being overextended. Many people are unaware that using too much credit is the main cause of these problems. Knowing this will allow you to put a game plan together and allow you to pay off debt, which will help your credit score and, eventually, lead to a lower interest rate.

Also, if you've done a short sale within the last 3 years, your credit may have been impacted significantly. It typically takes about a minimum of 2 years for a borrower to be qualified after a short sale. 

It all comes back to this: you need to talk to a lender about your credit score before anything else. The better your FICO score when you enter the marketplace, the more successful you'll be in financing your home.

I know it's a lot to take in, but this is crucial. I want to help you have the best possible experience buying real estate here in San Fernando Valley.

If you have any questions, I'd love to hear from you! Give me a call at (818) 720-9922 or email me at Scott@ScottWorks4u.com.