The Pains of A Poor Credit Score
Having a very low credit score can drive you nuts. Majority of creditors consider 620 as the bottom cut off for prime loans, which is kind of like the separating line between good and bad credit.
A credit score of above 620 would still most likely be considered as a sensible credit. You won’t essentially be deprived of credit, but the best rates will not be given to you. You might possibly learn that securing loans are extremely hard at this point. And if you ever get approves, the interest rate will be extremely high and the conditions might be a lot less than perfect.
That said, if you are looking to buy or refinance a home or a car, a higher mortgage rate is to be expected. You must take every measure just so you can boost your credit score to avoid being in this kind of rut.
It goes without saying that, the higher you can boost your credit score, the better benefits you will reap. Anything below 620 is basically a poor credit score. Your risk of default is pretty high and before a lender even thinks of approving you for a loan, strong compensating factors will be asked from you.
If your credit score is around 620, it may seem that you have done some financial mistakes. This predicament happens if you own credit cards that are maxed out. Spending way above your credit limit makes it much more damaging for your credit score. When you max out different credit cards or go beyond the credit limit, you send the wrong signal to your prospective creditors that you have troubles living within your means. The money you make is not adequate, so you resort to your available credit. This can have a negative impact on your credit score.
Always remember that your credit score depends on the data seen in your credit report. Therefore, vigilantly checking the information in your report is an essential measure to take.
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Categories: Credit Score Articles Tags: bad credit score, credit cards, Credit Score, creditors, kind, poor credit score, rate
How does my credit score affect my VA loan interest rate?
Many VA loan borrowers wonder if their interest rate is tied to their credit score. The main question asked is “How does my credit score affect my VA loan interest rate?”
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Q&A: Paying off debt to get a better rate for buying a house.?
Question by Ervin: Paying off debt to get a better rate for buying a house.?
I’m currently paying down what I owe on my credit cards. When I receive my tax refund… I plan on paying it off. March of this year I will be debt free. Will that raise my credit score? I’m asking because in a about 1.5 to 2 years I want to buy a house with good credit.
Best answer:
Answer by Toni
Using less than 30% of your available limits is what keeps the scores up.
Ex: $ 1,000 limit – never use more than $ 300 at any time during the month.
That’s why experts will tell you:
Use your card for small things you need like food or gas and pay in full each month.
Make sure you do not close those accounts when you are finished paying them off.
You want to keep payment history, and you want to keep it ongoing.
By paying in full you never pay interest and can get those top scores.
A years worth of paying in full each month should get you a pretty good rating.
Enjoy purchasing your new home someday.
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What Credit score do I need to get the best rate without a co-signer?
Question by David L: What Credit score do I need to get the best rate without a co-signer?
I have around $30K in private student loans that I had my brother co-sign with me on. I am paying Prime + 0% which is really nice, but I wanted to consolidate and use the LIBOR rate (which is lower than prime, I would save over $2000 in 10 years by dropping just 1% point). I have what I think is a very good credit score (760) and wanted to get the best rate so I could try to avoid asking my brother to co-sign again. Is my score high enough to go in alone without a co-signer and get the best rate? Thanks in advance.
Best answer:
Answer by spifiman1
Your score is fine. It depends on what your score is made up of.
Credit score is based on the following;
1. Pay history 35%
2. Time in bureau 15%
3. New credit 10%
4. Type of credit used 10%
5. Debt to income ratio 30%
As you can see 1, 2, and 5 are the most important as far as score is concerned.
The problem that people run into is that they have nothing to qualify them for what they are attempting to borrow money for. Lenders look for whats called “like credit” when they look at a application.
I see people every week with 700+ scores that are made up of nothing but 1 credit card with a $500.00 limit paid 15-times and a couple of student loans and I can’t get them approved to buy a car because they have no “like credit”.
Score is not everything no matter what anyone says.
Know better? Leave your own answer in the comments!