Kim Clark Explains How Your Credit Score Is Important

CAPE COD, Mass. - Oct. 7, 2014 - PRLog -- We’ve all seen those commercials on television, right? You know those ads – they feature cute jingles designed to make us wonder just what we need to know about our credit scores. But here’s the important question: do you know why your credit score is so important?

Well, one of the most important features of your credit score is its impact on your potential ability to secure a home mortgage loan. Good credit can not only land you that all-important financing, but can also lock in an attractive interest rate. Meanwhile, poor credit can not only adversely affect your interest rate, it can also mean you might not even qualify for a home loan. Poor credit can indicate to a lender that you are a bad risk for financing.

Since the issue of credit is so important, here are a few things that you need to know when you decide to buy a home:

What is a credit score?

Your credit score is a number between 300 and 850; a number on the high end indicates good credit, while a low number can flag you as a poor risk for financing. There are three main credit reporting bureaus in the U.S.: Experian, TransUnion, and Equifax, and these entities assign your score based on your credit history. Your credit report contains the score assigned to you by each of these three bureaus. You are entitled to request one free credit report annually so that you may keep tabs on your credit score.

What constitutes a credit history?

From the moment that you assume any debt – be it from credit cards, student loans, an auto loan, or other loan or line of credit, you have established a credit history. Your history, as determined by the credit reporting bureaus, consists of whether you have fallen behind on your payment schedules, defaulted on any debts, or paid every bill on time. Unpaid or late payments result in a drop in your credit score. Paying close attention to when your bills are due is a must for maintaining stellar credit.

What do I do if I have poor credit?

The best solution for poor credit is a regimented approach to paying your debts. If you’ve fallen on difficult financial times, a credit counselor or reputable credit remediation service might be your best bet for consolidating debt and setting you on the path to improved credit. If you have some minor blemishes in your credit history, it’s important to get back on track by paying your bills diligently and on time. With a little patience, you can work your way back to a better credit score. Whenever you apply for any type of loan, the lender you use is going to run your credit. Too many inquiries into your credit history can also have an adverse effect on your credit, so it’s important not to put yourself in a situation in which many lenders are making credit inquiries on your behalf.

Good credit takes time and diligence, while poor credit is just a couple of mistakes away. Making sure you understand your financial obligations is essential to maintaining good credit. If you believe that your credit report contains an error, it’s vital that you follow up with the lender in question and if necessary, address the credit reporting bureau directly to repair the problem.

If you’re in the process of buying a home, speak with your real estate agent and your lender to determine your prospects for obtaining a loan so that there aren’t any surprises waiting when you make a move to secure home financing.

Do you want to learn more? Visit www.Baysiderealtyconsultants.com for more information.