WANT TO SAVE THOUSANDS $$$$$$$ ON YOUR NEW HOME PURCHASE? IMPROVE YOUR FICO SCORE! {NEW HOME BUYERS -PART TWO OF SIX}
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
SAVING THOUSANDS $$$$$$$ ON YOUR HOME PURCHASE
Do you know your credit score? Do you check your three credit reports annually (minimum)?
A good credit score results in better interest rates on loans, credit cards, and other types of credit and increases the likelihood your loan application is approved.
In the case of a mortgage loan, a good credit score can qualify you for a higher loan amount and lower the down payment requirement. A great credit score saves you tens of thousands of dollars!
In addition to the financial cost of a low credit score, it negatively impacts your chances of getting hired for some jobs. Several of my employers checked my credit score before making an offer.
GOOD NEWS: U.S. AVERAGE CREDIT SCORE HAS BEEN CLIMBING FOR THE PAST TEN YEARS
https://www.badcredit.org/how-to/credit-score-charts/
FICO CREDIT SCORE RANGE
A FICO score assesses an individual’s creditworthiness. It is a numeric representation of a person’s creditworthiness based on their credit history and other financial behaviors. FICO scores range from 300 to 850, with higher scores indicating better creditworthiness.
If you’re looking to buy a home for the first time, improving your credit score is a top priority.
Look at the below chart to see how much you can save each month if you have Very Good to Excellent credit.
NEW BUYER ASSUMPTIONS:
Home Cost: = $450,000.00
Down payment = 5%; $22,500.00
Loan Amount: $450,000.00- $22,500.00 = $427,500.00
Loan Term: 30 years; Fixed
Date: April 30, 2023
A VERY GOOD OR BETTER CREDIT CAN SAVE YOU $721.00 EVERY MONTH!
| FICO Credit Score Range | Interest Rate | Monthly Payment Mortgage only |
| 760 -850 | 6.32% | $2,635.91 |
| 700 -759 | 6.54% | $2,717.94 |
| 680 -699 | 6.72% | $2,793.55 |
| 660 -679 | 6.93% | $2,876.38 |
| 640 -659 | 7.36% | $3,088.91 |
| 620 -639 | 7.91% | $3,357.05 |
CREDIT SCORE FACTORS
ENSURE CREDIT REPORT ACCURACY
To improve your credit score, you must review and correct your report as needed.
You are entitled to one free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once yearly. You can obtain your free credit reports by logging into http://annualcreditreport.com
Credit monitoring services: Many credit monitoring services are available that provide credit scores as part of their offerings. Some services offer free credit scores, while others charge a monthly fee. Examples of credit monitoring services include Credit Karma, myFICO, and Identity Guard.
Once you obtain your credit report, it will contain information about your credit history and creditworthiness, including below. Review your report for errors, such as incorrect balances or accounts that don’t belong to you. If you find any errors, dispute them with the credit bureau.
- Personal information, such as your name, address, Social Security number, and date of birth.
- Credit accounts, such as credit cards, mortgages, auto loans, and student loans, and their payment history.
- Public records, such as bankruptcies, judgments, and tax liens.
- Inquiries are requests for your credit report by lenders, landlords, or other third parties. Stores run special deals of zero interest for, say, 12 months. They ask permission to run your credit report to see if you qualify. You can lower your credit rating by having several inquiries. Only allow someone to run your credit report if you seriously consider using their loan.
IMPROVING YOUR CREDIT SCORE
- Pay your bills on time: Payment history is the most significant factor affecting your credit score, accounting for 35% of your score. Pay all your bills on time, including credit cards, loans, and utilities. If you’re having trouble paying bills on time, consider setting up automatic payments or reminders to avoid late charges. If you forget a payment, call the company. Sometimes they will waive late charges.
- Reduce your credit utilization: Your credit utilization is the percentage of your available credit that you’re using. Ideally, you want to keep your utilization below 30% of your available credit. Paying down your balances can help improve your credit utilization and, in turn, your credit score.
- Length of credit history accounts for 15% of your credit score. Closing old credit accounts can shorten your credit history and potentially hurt your score. If you’re not using an old credit card and not being charged annual fees, keep the account open to maintain your credit history.
- Limit new credit applications: Every time you apply for credit, it triggers a hard inquiry on your credit report, which can temporarily lower your score. Limit your new credit applications while you’re working to improve your score. If you need to apply for credit, do it all at once so that multiple inquiries are grouped.
- Consider a secured credit card: If you’re having trouble getting approved for a traditional credit card, consider a secure credit card. A secured card requires a cash deposit, which serves as collateral, and can help you build or rebuild your credit.
- Maintain a good credit mix: A mix of credit types, such as a credit card, a mortgage, and a car loan, improves your credit score.
CONCLUSION
Back to my first two questions. Do you know your credit score? Have you reviewed your three credit reports? Is your credit score Good or better? How can you improve your score and save yourself thousands of dollars? GET TO WORK!
WHAT SUBJECTS DO YOU WANT TO READ NEXT? WHAT QUESTIONS CAN I ANSWER? UNTIL NEXT TIME!
LET’S MAKE SOME MONEY! – CRYPTOCURRENCY, ANYONE?
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE!
I GIVE BECAUSE I CARE!
St Jude Hospital: The mission of St. Jude Children’s Research Hospital is to advance cures and means of prevention for pediatric catastrophic diseases through research and treatment. Consistent with the vision of our founder Danny Thomas, no child is denied treatment based on race, religion, or a family’s ability to pay.https://www.stjude.org/
Wounded Warrior Project: An American charity and veterans service organization that offers a variety of programs, services, and events for wounded veterans of the military https://www.woundedwarriorproject.org
Folds of Honor: Providing life-changing scholarships to the spouses and children of America’s fallen or disabled military. And now, our mission expands to the families of America’s first responders. On our watch, those who protect our freedoms and our families will know they are not forgotten. https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: A N0-Kill shelter that is a top-rated non-profit. They compassionately care for all their animals. https://wcnkas.org
Tunnel To Towers: Since 9/11, we have been helping America’s heroes by providing mortgage-free homes to Gold Star and fallen first responder families with young children and by building specially-adapted smart homes for catastrophically injured veterans and first responders. We are also committed to eradicating veteran homelessness and helping America to Never Forget September 11, 2001. https://dogood.t2t.org/give/320847/#!/donation/checkout
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STRATEGIES FOR FIRST-TIME BUYERS TO AFFORD A HOME IN TODAY’S MARKET {PART ONE OF SIX}
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WHAT DOES IT TAKE TO DEAL WITH YOUR IRRATIONAL MIND? – CRITICAL THINKING SERIES – PART NINE (9)
WHAT STAGE ARE YOU IN CRITICAL THINKING DEVELOPMENT? – FINAL CRITICAL THINKING SERIES – PART 10
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Jamie Dimon, Chairman and CEO JP Morgan Chase and Company, 2021 Letter to Shareholders
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https://wealthbuildingpowers.com/2019/04/01/financial-literacy-is-just-not-that-complicated-trust-me/
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for Financial Literacy. I will help you get there.
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