Credit 101 - Living at Epperson

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Now that that’s out of the way we can get onto the good stuff. I believe it is fair to say that you, like most people, would love to have the best credit score attainable. Maybe you have a good score now but just want to know how you can improve it so you can have the best mortgage possible. Maybe you have a low score and have no idea where to start. In this post and in the next I will go over some simple ways to improve your score and get you on the track to home ownership.

We are going to first discuss what a credit score is and how it affects you.

What is a credit Score?

Before we go there let’s discuss credit bureaus. Credit bureaus are reporting agencies that collect credit information. There are three main credit bureaus that collect this data. The “Big Three” are Equifax, TransUnion, and Experian. After the credit information is collected, it is then compiled into credit reports that are sold to financial institutions. A credit score is basically a numerical representation of your credit worthiness based on these reports. These scores range between 300 and 850. As you probably already know the higher the better.

Where do you fit?

Once you know what your credit score how do you know if it is a good score or not? While you may currently fall into one of the categories below it doesn’t mean that is where you will be forever. This is just a generalized idea of where you may be standing.

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 600

How is my score calculated?

There are 5 categories that effect your score.

  • Payment History – (accounts for 35% of most scores) Have you made your payments on time?
  • Credit Utilization – (accounts for 30% of most scores) This formula calculates the amount of credit that is being used out of your credit limits as a whole.
  • Length of Credit History – (accounts for 15% of most scores) How long have you had a credit card?
  • Mix of Accounts – (accounts for 10% of most scores) Creditors like to see multiple types of credit. These may include revolving credit like credit cards and installment loans such as a mortgage or vehicle loan.
  • New Credit Inquiries – (accounts for 10% of most scores) The frequency you apply for a new loan or credit card.

If your credit falls at 680 or less you may have trouble finding financing for a home or getting a preferred rate. Your priority to maximize lending opportunities should be to raise your score as much as possible. Don’t worry I will go over tips in my next post of this series.

How does my credit score affect me?

The better your score the better your rates. It is as simple as that. If you have good credit and are buying a new home for $300,000 with a 30-year mortgage (fixed) you could end up paying up to $90,000 less than someone with bad credit (over the term of the loan). Also, some utility down payments will be based on your credit score.

There are also some common myths that you need to be aware of.

Checking your credit report will hurt your score

If you check your own report, it will not affect your credit score. It’s called a “soft inquiry”, meaning it will only show up on your personal credit report. This is different than when you apply for credit. When this happens a “hard inquiry” will then be added. Expect these to affect your score.

My credit score is bad so I can’t get a loan

Not necessarily true. There are programs out there and loans available that may help you get into a home. For instance, I work with a builder who offers credit help. If you are going to be purchasing a home, they can pre-qualify you and then work on your credit while your home is being built. If you are ready to find out if you can be pre-approved for a loan please let me know and I can direct you to a loan officer best suited for your needs, keeping in mind I am not being paid to refer you to any lender!

An agent won’t work with me if I have poor credit

Yes and no. Some agent won’t. I will however. I can help find a loan officer or a credit repair company that is right for you. Also expect me to stay in contact with you while you work on your score and keep you updated on the market. Then when you are ready we will be able to move forward quickly and at ease.

My income affects my credit score
Some people worry that they don’t make enough to get a loan and that a low paying job affects their score. Your yearly income does affect the amount you can get on a loan but it will not decrease or increase your credit score. Again, your income does not affect your credit score.

Remember a strong credit history takes time and consistency to build. Whether you interested in a home in Epperson or elsewhere, knowing your credit score is a good place to start on the path to home ownership.

Stay tuned for next week’s article on Part 2 of Credit 101!

If you can’t wait and have questions now feel free to contact me.

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Realtor Balloons - Epperson

Building a new home is exciting and can be fun. You get to pick out paint colors, finishes, choose your lot, etc. . It’s not all fun though.  When It comes to the part of the process where  the construction needs followed up on or other issues arise you want someone on your side.  My job is to be that person and to ensure the process stays on track while shepherding you through the home buying experience. Here are just a few of the many ways I do that.

I Represent the Buyer and Not the Builder

Each builder has their own sales team and/or site agent, stationed at their model home. The site agent represents the builder and are there to sell their employer’s homes. Their one and only goal is to see you buy one of their homes. Now, this doesn’t mean they are bad people or even that they would steer you in the wrong direction. My job on the other hand is to work for you. My goal is to help you find the perfect home.   That home may be new construction in Epperson or an existing home in the area, it makes no difference to me. I want to know what your needs are, and then use that information to find your next home and guide you through the process of purchasing it.

No Cost to You

This is one of the biggest misconceptions clients have about Realtors. A lot of buyers whether buying a new construction home or even an existing home ask what they will have to pay to use a real estate agent. The answer is $0 as long as they start the process with them! As with the sale of any home, Real Estate fees come from the seller’s side of the transaction.  The seller essentially pays the buyer’s Realtor for bringing the buyer to them.

Guidance

I counsel you through the entire process.  I am there to answer any questions you may have and provide assistance along the way.  We work together from the beginning and I stick around until the end.

Construction Oversight

Do you have questions on the construction process? Maybe you are considering upgrading your tile and have questions. Want to know why they just sprayed something on the plywood of your new home?  Why is one part of the process lasting longer than expected?  Let me use my experience to ask the questions that home buyers often overlook during the construction process and do the leg work to track down information that you may require.  Allowing me to act as your liaison with the builder allows you to focus on other things.

If you are interested in the construction process and what to expect, be on the lookout for more fun articles coming up!

Whether you are ready to move forward or just have additional questions about Epperson feel free to contact me.

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