As a home buyer, your credit score plays a crucial role in determining the interest rate you'll qualify for on your mortgage. A good credit score can save you thousands of dollars over the life of the loan. At Realtor.us, we believe it's essential to understand how credit scores work and what factors affect them.
A credit score is calculated based on information from your credit reports, which are maintained by the three major credit reporting agencies: Equifax, Experian, and TransUnion. The most widely used credit scoring model is the FICO score, which ranges from 300 to 850. A score above 700 is generally considered good, while a score below 600 may indicate higher risk.
To improve your credit score, focus on paying bills on time, keeping credit utilization below 30%, and avoiding new credit inquiries. You can also request a free annual credit report from each of the three major agencies to ensure there are no errors or inaccuracies.