My mother always told me that if you have good credit, you will be able to afford almost anything you NEED. As a rule it takes awhile to establish good credit, and only a few foolish choices to wreck it!
There is nothing worse than getting all excited about a house, then finding out that your credit is so bad you could not afford to buy a 1992 Honda Civic!
In order to determine what you can afford, most lenders check your FICO credit score. You can get a free copy of your credit report free either by mail or online at: www.myFICO.com. You are entitled to one free credit report once a year. But beware, too many credit inquiries will have a negative effect on your credit score.
Scores range from 350 to 850. Under 600 and you are most likely going to have a tough time getting a loan. 660 seems to be the magic number, and the higher the better. 720 and up things should be real easy for you.
In order to figure out your credit score, most lenders weigh your credit history using this formula:
Timely Payments = 35%
Total Debt = 30%
Length of Credit History = 15%
New Credit Inquiries = 10%
Amount/Type of Credit = 10%
We are by no means experts in the credit world we just want you to know what your FICO credit score is and how it will effect your home purchase. If you are in credit trouble we suggest that you find a good credit counselor and get a plan together so Comet Realty can help find you a new home!
