How Does Credit Card Limit Affect Credit Score?

How does going over credit card limit affect your credit score

A large purchase has just come up, and you need to put it on the credit card. However, you’re very close to the card’s limit. In fact, this purchase may cause you to exceed your credit card limit. It’s important to understand your credit score and how it’s impacted by these spending habits. How does credit card limit affect credit score? Learn everything you need to know right now.

Dropping Credit Score

The immediate impact on your credit is a drop in your score. If you spend even one penny over your limit, your score can drop 40- or 50-points. This point difference is huge if you’re considering buying a house or vehicle in the near future.

Your credit score may not immediately drop because it may take your creditor a few weeks to notify the credit bureaus. During this time before the credit bureaus are notified, you may contact your creditor to clear up the issue before it is reported.

Utilization Concerns

How does going over credit card limit affect your credit score? With industry terms, your utilization percentage becomes a problem. Utilization is the ratio of your card balance with the available credit. If you go over your limit, your utilization value is 100 percent or higher. The credit bureaus frown upon these numbers, and as a result, your credit score goes down.

In some cases, overutilization will appear on your credit report. This permanent part of your record can be an issue in the future.

Creditors’ Reactions

Creditors will take several actions to rectify the situation. One action that they are sure to take is to charge an overspending fee. As a result, the charge may put you further into debt and increase your utilization percentage. Additionally, a creditor may lower your credit card’s limit. Consequently, having your credit limited lowered by any amount will make overutilization look worse than before.

It is important to communicate your financial situation to your creditor. The promise of a payment in the near future may delay a creditors action against you.

Paying Attention to Late Fees and Interest

You may have overspent on your credit card, but it’s only by a few dollars. Regardless of the billing cycle’s date, pay down the card to get the balance below the limit. Late fees and interest will accrue from the moment that the charge hits the card. You don’t want those fees to accumulate either. They can be expensive over several billing cycles.

Now that you know how does going over credit card limit affect your credit score. It’s important to understand that in order to resolve your situation by paying down your card’s balance as soon as possible. With this in mind, your credit score will improve with time. If you continue to find yourself meeting your credit card limit, consider requesting a higher credit limit. Your score will be slightly affected; however, it will positively impact your utilization percentage.

Creating a budget is one of the simplest things that you can do for your credit score. It gives you a plan for spending less than you make. Although this scenario seems difficult, you can control your spending when you understand those limits. A better credit score will be your reward.

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What Happens When You Miss a Credit Card Payment?

What Happens When You Miss a Credit Card Payment?

Whether you forgot about a bill or didn’t have the funds ready to go, missing a credit-card payment is problematic for your credit score and history. Before you worry too much about this situation, get familiar with the steps that you can take to resolve it. What happens when you miss a credit card payment? Several issues arise all at once.

Late is Late

When you’re late on a bill, it’s considered late from the moment that the due date has passed. The penalty for a late payment at 30 days is much different than the 90-day type, however. Creditors understand that a missed payment after a couple of days may be a simple oversight. Everyone is human.

If you go 60 or 90 days without paying anything toward the card, the creditors see this fact as a real aberration from your normal behavior.

Look for the Fees

Fees are inevitable if you miss a payment. There are normally specialized fees for missed payments that can cost $30 or more. In addition to late fees, there are also interest charges. The interest charged on your balance may increase as well because of the accumulating fees.

Be watchful of the fees impacting your credit limit too. If you are close to your credit limit, an overspending fee may apply to your situation.

Speak to a Representative

Don’t be shy when you miss a credit-card payment. Contact a creditor representative who has your account open on their computer screen. Creditors who are aware of your financial situation will be more likely to help you resolve the situation, and will have

You’re welcome to ask for a refund on a late fee or other charges if you’re paying something onto the account right now. Be aware, however, that the creditor has the right to approve or decline your request.

Pay More Than the Minimum

The only way to resolve your situation is by paying off the balance. The minimum payment may be tempting, but it amasses interest down the road. Take a look at your cash flow, and determine a reasonable payment plan. You may not pay down the balance this month, but you’ll be on your way to doing so. The accumulated interest will diminish too. Interest accrues daily; so, prompt payment is favorable.

Set up Automatic Drafts

To protect yourself from any future missed payments, set up automatic drafts on your bank account. You pick the date and amount that will be drafted from the bank. Each month the payment amount will automatically be paid from available funds in your account.

Your creditor may offer an incentive to keep up this automatic system, such as a lower interest rate or canceled late fees.

Examine Your Credit History

What happens when you miss a credit card payment? Your credit history is forever changed. Obtain a copy of your history so that you can see how the missed payment affects your credit. Depending on the severity of the situation, your history will now have a negative mark on it.

Look at your FICO score too. Your FICO score can drop as much as 50 to 75 points if the payment was egregiously late. Late payments warn creditors that you may not be responsible enough for another line of credit. 

If you make a habit of missing payments, it time to take a look at your financial situation. Paydays may not line up with your credit-card statements, for example. Call your creditors to set up due dates that match with your income. Most creditors will be willing to change the due date as long as you are able to make timely payments. Your credit score and history will be much better at the end of the day.

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Should you file for bankruptcy?

.Should you file for bankruptcy?

It seems finances are tight for everyone these days. Strict budgeting, side jobs, and federal government assistance are widely used to alleviate financial strain. For most this is enough, but for others, a drastic measure like bankruptcy is needed to resolve a sticky situation.

Bankruptcy is a viable solution for many but is often riddled with myths and misinformation. So, should you file for bankruptcy? We’ve explained the basics so you can decide.

Bankruptcy Basics

There are plenty of bankruptcy myths that keep people from considering bankruptcy as a solution. Will I lose all of my belongings? Will my credit score be ruined forever? These are all valid concerns and thorough research before filing for bankruptcy is needed to determine whether or not you should file for bankruptcy.

There are two types of bankruptcy that individuals can apply for – Chapter 7 and Chapter 13 bankruptcy. Each bankruptcy takes into account personal debts and income and will have different effects on your credit.

Chapter 7, known as liquidation, will force you to sell some non-exempt property in order to pay creditors. Because of the short duration of such bankruptcy cases, you should be able to begin rebuilding your credit in just a matter of months. Chapter 7 bankruptcies can stay on your credit report for as long as 10 years.

Chapter 13, known as reorganization, will let you keep the non-exempt property and pay its value over a period of three to five years. Even more, you can steadily build credit with each on-time payment while the case is still pending. This type of bankruptcy will appear on your credit report for 7 years.

Read More: What Happens For Your Credit When You File For Bankruptcy?

Should you file for bankruptcy?

Filing for bankruptcy is a big decision. It can resolve outstanding unpaid debts, and appease creditors; however, depending on your financial situation, the repercussions may not be worth the filing.

Bankruptcy will put an immediate stop to the following proceedings, here are factors that people consider when filing for bankruptcy:

  • Foreclosure
  • Eviction
  • Repossession
  • Utility Shut-off
  • Wage Garnishment

These are only a few factors that people consider when deciding to file for bankruptcy. Despite this, it is ultimately, up to you and your financial circumstances.

Why you shouldn’t file for bankruptcy?

Bankruptcy can render positive results for many people, but for others, it may not be worth the risk. Here are examples of situations in which you shouldn’t file for bankruptcy:

  • If you have not missed any payments, filing for bankruptcy is a bad idea. Bankruptcy can set you back significantly when it comes to your credit score. However, if you have missed payments on multiple lines of debt, then you won’t notice a big impact on your creditBankruptcy can make the path to fixing your credit much shorter.
  • It can hurt your chances if you wish to work around money or get a security clearance. Administrators of financial institutions and high-security jobs view financial troubles as a vulnerability. They worry that someone with a history of financial issues will take risks that others wouldn’t.
  • If a secured creditor has a lien on a house or a car, the property will revert back to them if a bankruptcy is filed.

Bankruptcy can be a scary subject with a lot of unknowns, but it is a legal right and is considered a positive second chance for many people. Before taking the plunge talk to a bankruptcy attorney to find out if bankruptcy is the appropriate action for you.

Bankruptcy Myths Debunked

Americans are experiencing debt stress like never before. Much of this stress stems from a higher cost of living and stagnant wages. Consumers are paying very high proportions of their income for housing. Many households also must manage vehicle loans, high insurance rates, student loans, and other financial stressors. Employment has also taken on a temporary nature in many industries. The result is high debt loads that often become unmanageable.

Bankruptcy provides households with the opportunity to bring their expenses down to a manageable level. Filing bankruptcy is a personal choice. It is not always the best solution for debt problems, but in many cases, it provides the only method for a household to regain solvency. If you are unable to keep up with mounting debts, understand that you have legal options under bankruptcy. These options release or restructure debts, allowing your household to afford the cost of living.

Many people put off bankruptcy because of several common bankruptcy myths. Putting off bankruptcy because of these myths is always a mistake. When considering bankruptcy, it’s important to have a clear understanding of what property you are entitled to keep, the effect on your credit history, and the process for rebuilding your credit afterward. Misconceptions about these aspects of bankruptcy should not affect your decision to get out of debt. Here are the facts to dispel these bankruptcy myths.

What property can you keep in bankruptcy?

Many people have the misconception that filing bankruptcy means they must surrender all of their possessions. This is completely false. No bankruptcy requires you to surrender the shirt off your back. You are allowed to keep some of your property. In some situations, you may keep all of your property.

The specifics depend on the debtor’s particular case and circumstances. To find out what property you are eligible to keep, it’s best to discuss your situation with a bankruptcy attorney. Here are several examples of property many bankruptcy petitioners are able to retain.

House

If you own a home, bankruptcy can help you stop foreclosure and keep the property. Your lender is barred from continuing a foreclosure while your bankruptcy case is active. During this time, the foreclosure process is essentially frozen. You have the opportunity to reaffirm the mortgage debt if you wish to keep the home. The decision to reaffirm should be based on what leaves you in the best financial position after bankruptcy.

It’s important to note that if you have home equity, the court could require you to sell the home. The proceeds would then be used to pay your creditors. Many states allow you to keep the home if equity is below a certain dollar amount. If you own a home, consult with a bankruptcy attorney before making a decision to file. You need to preserve your home equity if at all possible.

Car

Vehicle loans can also be reaffirmed. Vehicles without notes can be kept but only up to a certain value. Obtaining a new car loan after bankruptcy discharge is usually possible if you have the means to afford the loan. A bankruptcy attorney can advise you on the benefits and drawbacks of reaffirming a vehicle loan.

Personal Property

Bankruptcy allows most people to keep their personal property. If you have especially valuable property, a court may order it sold to pay creditors; however, this would only apply to the specific valuable property. For example, a court may not allow you to keep the expensive art. The property you need for daily living will never be in danger. A bankruptcy attorney will interview you about what property you have and advise you if you can keep all of it, which is frequently the case.

Credit Score and Credit Repair

One of the most common misconceptions about bankruptcy is that your credit will be permanently damaged. Though credit scores sink after a bankruptcy filing, they usually rise after the conclusion of the case. Creditors consider you a better risk because you have discharged some or all debts.

Another of the most common misconceptions about bankruptcy is that credit repair will take many years. In truth, your credit starts to improve as soon as the bankruptcy case ends. After bankruptcy, you can rebuild your score by using debt sparingly and paying all bills on time.

If you need advice on bankruptcy, contact a bankruptcy attorney, who can dispel the most common misconceptions about bankruptcy and help you become debt free.

Read More:

What Happens To Your Credit When You File For Bankruptcy?

How to Recover After Bankruptcy

Credit Repair After Bankruptcy 

 

Credit Score of 530: Home Loans, Auto Loans & More

credit score of 530

Increasing your credit score can seem overwhelming and you might even think it’s next to impossible. But you don’t have to settle for a low credit rating, even though with a credit score of 530, you have some work ahead of you to improve your rate.

Luckily, there are practical steps you can take to help raise your credit score. Let’s take a look at what you can expect with a credit score of 530 when it comes to credit cards and loans — and what you can do to boost your credit rating.

Credit Score of 530: Credit Cards

Attempting to get a credit card with a credit score of 530 can be difficult. You might be lucky enough to get approved, but you can expect to pay higher interest rates. You might also have to put down a deposit before receiving your credit card.

Another option you could take is getting a secured credit card with a reputable company. You’re required to put money down in advance, but it’s a great opportunity to easily build your credit score, and it can help you to make smarter financial choices.

Credit Score of 530: Auto Loans

With a credit score of 530, you can expect to pay a pretty high annual percentage rate (APR) on an auto loan. You might have to provide a large down payment and the dealership could even require you to have a co-signer for added security.

There’s the option of going to a “buy here, pay here” car dealership, but that doesn’t do anything to help build your credit. Plus, the amount you end up paying will be substantially higher than if you were to obtain a traditional auto loan.

Credit Score of 530: Home Loans

Buying a home with a credit score of 530 can be challenging. The Federal Housing Administration (FHA) offers loans with a 3.5% down payment to those with a credit score of 580 or more. If your credit score is lower than that, it increases to 10% for an FHA home loan.

For example, if you wanted to buy a $140,000 home with a credit score of 530, your down payment would be $14,000. With an increase of 50 points to your credit rating, it would go down to just $4,900. Talk about a great reason to build your credit!

How to Improve a Credit Score of 530

Now that you know what to expect with a credit score of 530, you’re probably wondering how you can improve your financial life by increasing it, right?

What you need is a simple, straightforward approach that gives you the opportunity to make small changes to improve your credit over time, and begin taking the right steps toward total credit recovery.

You don’t have to tackle credit repair on your own! Give us a call today at 1-866-991-4885 to learn more about one of our affordable credit repair programs, and we’ll help guide you down the road to better credit in no time.

Tips for Buying a Home in Your 20s

tips for buying a home in your 20s

Are you a 20-something-year-old who is looking to buy your very first home? We know it can be pretty overwhelming and confusing. Somewhere along the way, the home buying process may leave you wondering, “What in the world have I gotten myself into?” But don’t worry! We’ve put together these tips for buying a home in your 20s to make things easier!

1. Determine What You Can Afford

We’ve all heard it before, live within your financial means. This statement also applies to buying a house. As you look at homes, it is important to have a strong understanding of what you can afford based on your credit score and your financial history.

Look for properties that are within your buying capabilities. Buying outside of your finances capabilities can cause problems down the road affecting your ability to make mortgage payments and maintain good credit. When you buy inside your budget, you set yourself up for financial success.

2. Stash a Ton of Cash Under the Mattress

Storing cash under your mattress might not really be the best idea these days; the point is to start stashing your money away. In order to get a mortgage in this post-recession economy, the bank often requires a down-payment on your home of about 5%-10%.

If you’re looking at a $100,000 home, you’ll need $5,000 – $10,000 in cash at closing for the down payment. Plus, you’ll be expected to cover additional closing costs.

3. Build up Your Credit Score

Banks desire a credit score that is over 700 for anyone seeking a mortgage. The national average score is 695. You can’t raise your credit score in the blink of an eye, but we’ve put together several guides for those at various levels:

Figure out how many points you’ll need to raise your score then read the applicable guide above. It’ll give you specific strategies you can set in motion right away.

4. Apply for Grants and Payment Assistance

All of that credit score talk can feel really stressful! Here is some exciting news for you: There are grants and programs available to make it a little easier to purchase your first home.

Bankrate.com offers a list of nine ideas to help get you started:

  • FHA Loan
  • USDA Loan
  • VA Loan
  • Good Neighbor Next Door
  • Fannie Mae or Freddie Mac
  • Energy-efficient mortgage
  • FHA Section 203(k)
  • Native American Direct Loan
  • Local Grants and Programs

Each type of program has its own qualifications, so be sure to read up on each individual one!

5. Get Pre-Approved for a Mortgage

Many real estate agents will not even begin showing you houses if you have yet to be pre-approved for a mortgage. This is different from being pre-qualified. During the pre-approval process, a mortgage lender looks at your credit and income and writes a letter stating how much of a loan the bank will grant you once you make an offer on a home. A good real estate agent will help connect you with a reliable lender to get you started.

What questions do you still have about the house-buying process? We are available to answer all of your questions. Contact us at Info@GoCleanCredit.com or 480-991-4885.

Should You Pay More Than Your Credit Card’s Minimum?

should you pay more than your credit card's minimum

Most people are unable to buy the home of their dreams because of their poor credit scores. Having a large amount of credit card debt across one or multiple cards can present obstacles.

Some people feel they can only afford to pay their credit card’s minimum monthly payments, while others wonder if they should be paying more than that.  Today we answer the question of whether should you pay more than your credit card’s minimum and how paying more than the minimum offers many benefits.

The Two Main Methods of Debt Repayment

1. The Snowball Method

The snowball method works well for people who have a lot of credit card debt. First, you must check how much you owe for each card. Start off by paying as much as you can on the credit card you owe the least.

Once you’ve paid it off, pay off the card with the next highest balance.

2. The Avalanche Method

The avalanche method consists of paying off the credit card balance with the highest interest rate. This works best when you have a balance you know you can pay off in five years or less. It also works best for people who have the patience to pay off a debt over a long period of time.

Benefits of Paying More Than the Minimum

You Won’t Pay as Much Interest

Regardless of whether you choose the snowball or avalanche method, you’ll pay less in interest the faster you get rid of your debt. The snowball method allows you to pay off small debt sooner, while the avalanche method allows you to pay off your debt with the highest interest rates first.

You’ll Get Out of Credit Card Debt Sooner

You can choose the right method to pay off credit card debt depending on which one makes you feel better. The snowball method fits people who need small victories to motivate them, while the avalanche method works best for people who are more patient.

Your Credit Score Will Improve

Though there are many ways to improve your credit score, paying off credit card debt is one of the best ways to do so. FICO scores are confusing by design. Paying off your debt is one way to ensure you’re on the right path toward improving your credit score.

The importance of paying off credit card debt

It Instills Good Financial Lessons and Habits

Paying off credit card debt requires you to make lifestyle changes that will help you pay for a mortgage. You can even use apps such as Mint to track how you spend your money in order to have a better idea of where your money is going.

Read more: 4 Tips For Using Your Credit Card

It Increases Your Line of Available Credit

Another key benefit of paying off your credit card debt is how much doing so can improve your credit score. Bolstering your credit score will give you more breathing room with your credit cards as you’ll have higher limits.

It Makes Buying a Home (Or Anything) MUCH Easier

Having low credit card debt is important if you’re hoping to buy a home or car in the future. Your mortgage and automotive interest rates will likely be higher if your credit is poor. You may not even qualify to be a homeowner if you have too much credit card debt.

While improving your credit score may sound daunting at first, our team of experts can help to permanently fix your credit in no time. Contact us today!

How To Build Credit Without A Credit Card

how to build credit without a credit card

Your house is in foreclosure… Numerous credit card companies have rejected you because of your poor credit score… You need to build credit fast!

But… You need a credit card for that, right? Not necessarily.

It doesn’t matter why you have bad credit. You just need to learn how to fix it — even if you don’t have a credit card! These seven points will build up your financial self-confidence and show you how to build your credit without a standard credit card!

1. Invest in a Secured Credit Card

A secured credit card is a credit builder’s best friend! It gives you access to a line of credit in exchange for collateral (a small deposit).  which helps mitigate some of your lender’s risk. While paying a deposit may seem a little scary, don’t fret. Most deposits are no more than a couple of hundred dollars.

Secured credit cards tend to come with low monthly fees and some lenders will even give cardholders perks like cash back. Also, since your card is secured by a deposit, defaulting on your balance may not lead to a ding on your credit score. It will, however, result in the loss of your deposit.

The best part about secured credit cards is that you’ll only need to use them for a limited amount of time! As you prove to your lender that you can make timely payments, your credit score will go up. As it does, you’ll find that you qualify for a number of other cards with better terms and no collateral requirements!

2. Get Approved for a Credit-Builder Loan

Want a true credit card alternative to building your credit? A credit-builder loan has you covered!

Several types of credit-builder loans exist.

Pure credit-builder loan: This loan type is a savings account/loan hybrid. Basically, the lender deposits your loan amount into a savings account and freezes that money. You then progressively contribute to the savings account an amount equal to the loan.

Once you’ve paid down the loan, the money unfreezes and is awarded to you.

Proper management of this process can give your credit score a serious boost!

Standard secured loan: With a standard secured loan, you’ll need to show your lender that you have assets equal to the amount you’re looking to borrow. That way, if you default, the lender can repossess your assets and pay themselves back.

Unsecured loan: Unsecured loans are common for medical expenses and other emergencies. These are relatively straightforward in that you apply for an amount of money and, upon approval, walk out with that amount the same day. You will then need to pay back the loan per its pre-determined payment schedule.

Unsecured loans can come with high-interest rates and fees to help lower a lender’s risk.

3. Ask Someone to Cosign for You

A lot of credit products you may not ordinarily qualify for will consider approving you if you can find a cosigner.

A cosigner is a person who has good credit and vouches to take care of your debt if you should default. With a cosigner, you can often enjoy low-interest rates, credit card perks and of course, the ability to build up your credit.

4. Become an Authorized User on Someone Else’s Card

Becoming an authorized user means getting a credit card that’s attached to someone else’s account. Given that the account holder is liable for ensuring balances get paid, banks are very liberal about authorizing additional users despite their credit history.

If credit card companies see that you are responsible with money as an authorized user, they are more likely to issue you your own card in the future.

5. Use Rent-Reporting Agencies

Rent payments are seldom reported to credit bureaus but they can and should be.

Why?

Because timely rent payments help build credit.  

Every instance where a person demonstrates the responsible handling of their rent will work in their favor on a credit report. Also, future landlords will be more likely to rent to applicants with reported histories of prompt housing payments.

6. Build Good Financial Habits

This point might sound obvious but at the end of the day, how you manage your money can have a profound impact on your credit score.

Live within your means. Buy only what you need as inexpensively as you can. Whenever possible, pay upfront. When you do spend money, spend it on things that you really need and that are built to last.

Also, never get caught up loaning money to people who aren’t likely to pay you back. This can not only strain your wallet but can also strain relationships.

7. Enlist the Help of a Credit Repair Agency

Credit repair agencies remove negative items from credit reports.  These items can include repossessions, liens, foreclosures, and late payments.

You may be surprised to learn that many indications of poor credit on credit reports are errors. There are a lot of companies who specialize in finding and removing those errors for a nominal fee.

With an error-free credit report, you’re more likely to strike banks and credit card companies as a promising applicant and be approved for loans!

If you want to learn more and start paving your path towards a promising financial future, contact GoCleanCredit.com or give us a call at 1-866-991-4885 for expert advice.

 

Credit Score of 569: Home Loans, Auto Loans & More

credit score of 569

A credit score of 569 indicates that you’ve got some work ahead. Nothing’s impossible, but it’s also not easy. At this level, the best thing you can do is focus on raising that number.

If you’re going to apply for loans, make sure the monthly payments are reasonable. Check the interest rate too, as those can become astronomical at your score. Pay your bills on time and avoid getting in over your head with credit lines.

With that pattern, you’ll be able to raise your score by 100 points or more. However, you’ve got to start somewhere. By the end of this article, you’ll know exactly where.

Credit Score of 569: Credit Cards

Most credit card companies won’t take the risk on you with a credit score of 569. It’s unfortunate, but you must stay realistic about this.

That’s why you start with a secured credit card.

Once you start making steady payments, it establishes a good record. Over time, you build a reputation and become trustworthy in the eyes of creditors. Then you can graduate to a “real” credit card.

Don’t go crazy, though! Always balance your credit to debt ratio reasonably. If you don’t have the money to pay for it straight out, don’t put it on your card.

If not, you’ll be back at square one in no time!

Credit Score of 569: Auto Loans

Auto loans are a little easier. Just about anyone can qualify if you go to the right place. Unfortunately, it’s hard to find a reputable or reasonable creditor. Be careful because you may find yourself falling prey to a bad financial situation.

Low/no credit auto loans will lock you into interest rates as high as the principle. If you are desperate for a car, it really does put you into a bind. However, just a few months of credit building can put you in a better spot to qualify from a legitimate financer.

Try to shop around, especially if you’re desperate for a car and must get an auto loan with a credit score of 569. Make sure to avoid directly applying for too many loans, though, as this can hurt your score even more.

No matter what, only apply for a loan you can afford. It’ll keep your bank account and stress-levels at a comfortable level.

Credit Score of 569: Mortgages

Mortgages will be especially hard. If you do manage to get one, it may be a less established bank and/or a high interest amount. The principle on a house is higher than credit cards or auto loans. A high interest rate can ruin your financial life.

Look into FHA or Federal Housing Administration loans. They may be able to help. They accept low down payments and will sometimes take people with low credit scores.

If not, keep saving and building credit! Once you’re in a better place financially, traditional mortgages will be far easier to obtain.

Imagine the world of opportunities that will be open to you once your credit is good. Nice car? Check! Picket fence? Check. Live the dream!

If you want to be able to apply for loans, it’ll be hard work. That’s what we offer here at GoCleanCredit.com: strategic support. Our credit restoration experts can help you back on to your feet in no time.

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What is a Good Credit Score to Buy a House?

What is a good credit score to buy a house?

People looking to buy property often have thousands of questions running through their mind. But one of the most common is, “What is a good credit score to buy a house?” That’s because the better your score, the lower your interest rates. So, the less you will pay in the long run.

There are many rating systems, but FICO is the one most often used by lenders. Your FICO score can range from 300 to 850. But what makes an excellent credit score and what is considered poor?

Let’s take a look at where you fall and what options are available to you when buying a house.

Excellent Credit Score

As a general rule, an excellent credit score is anything above 760. If you’re above that marker, congratulations, you can get the best financing terms available when borrowing money.

An excellent credit score will mean you will get the lowest interest rates around. In the long run, you could end up saving thousands of dollars on your mortgage repayments.

As the FICO website says if you are looking to buy a property with a $216,000, a 30-year fixed-rate mortgage you could be looking at an interest rate of 4.2%. That’s a monthly repayment of $1,057. But what if your score isn’t as high?

Good Credit Score

A good credit score is anything above 660. With this score, you should still be able to find a loan, but you will be paying a higher interest rate.

Taking our example from earlier, a score of 665 could secure an interest rate of 4.82%. That would make monthly payments of $1,135.

It’s worth trying to improve your numbers before you start your applications. You can improve your credit score in a number of ways. Here are two options:

Removing a recent late payment. The most effective method is to call the creditor and request a goodwill adjustment. If that fails, you could negotiate the removal by signing up for automatic payments.

Removing a collection account. Paying your collection account probably won’t improve your score. Instead, try to negotiate with the servicer for a “pay to delete” — and remember to get it in writing.

Poor Credit Score

A poor credit score is anything 619 and below. For most mortgages, you will need a 620 credit score or higher. However, there are loans available for anything down to 570.

A FICO score of 625, using the same example as before, would secure a 5.79% interest rate. That’s a monthly repayment of $1,266.

It’s extremely important to raise your score to secure a reasonable rate. One of the best ways to do this is to speak to credit restoration experts.

There is no single path to restoring your credit score. By speaking to the experts they will find the best program for you.

Speak to GoCleanCredit.com today and receive a free in-depth credit consultation. It’s the first step to improving your credit score and securing the home of your dreams.