Unless you are wealthy, you will need to leverage your credit to finance a home, auto loan, or to qualify for (school, personal , or business) loans, insurance premiums and credit cards. Some employers will even review your credit score when considering your application for employment.
If you are considering purchasing a home, it will likely be the largest purchase you’ll ever make. Your credit score will help determine what interest rate you qualify for, or if you qualify at all. Most mortgage lenders use the FICO scoring model, and require a minimum credit score of 620 to qualify. The lower your credit score, the higher your interest rate. A person with poor credit may pay 1-2 points more in interest, than a person with good credit. Checking your credit is a good way to prepare before buying a home, or making any large purchase, as a good credit score will save you thousands of dollars over time.
In the example above, a conservative 1 point interest rate difference equates to an increased payment of almost $150 per month – or $1800 per year. Since most mortgages last up to 30 years, investing a little time to check your credit score now, will be well worth it!
If you would like help with your credit, contact us for a free consultation today!