Your credit score is important — especially if you’re hoping to buy a home. It can influence your eligibility for a mortgage loan and play a role in your loan’s interest rate.
But don’t let that scare you. Your credit score is in your control, and you can do a lot to improve it if you know the facts.
Planning to buy a property soon? Then check your credit score, and don’t believe these all-too-common myths:
Myth 1: A higher income means you have a higher score. Your income has no direct influence on your credit score. It’s determined by five factors: payment history, the balances you owe, your credit mix, how long you’ve had credit to your name and how many recent credit inquiries you’ve had.
Myth 2: The score you see is the same one a lender sees. Taking a look at your score can give you an idea of what lenders will see. But in most cases, your mortgage company will see a slightly different score. They might even pull multiple reports or use their own proprietary scoring system.
Myth 3: Closing an account is good for your score. Paying off an account balance can be helpful, but closing that account when you’re done isn’t always a smart move. The length of your credit history accounts for about 15% of your score, so keeping an account open — even if you don’t use it — is usually better in the long run.
Myth 4: Raising or lowering a credit score takes a long time. You’d be surprised at how quickly you can improve your score — or hurt it. Alerting a credit bureau of an error on your report may give you a boost quicker than you’d think.
Your credit score is constantly in flux, so if it’s not where you want it, there are plenty of ways to change that. Reach out if you need more information about purchasing a home.