Your credit score is only the beginning in understanding how it will affect you in purchasing big ticket items such as a home. Where your credit score lies on the credit score scale can greatly determine if you are going to be able to get FHA, Conventional or VA loans, and whether the interest rate will be high or low.
Fluctuations: Pretend that you are looking at a thermometer. It goes up and down depending on the temperature. In the summertime, the temperature on the thermometer stays up during a heat wave. Think of your credit in that way. You want your credit score number to stay up and as high as possible.
What is the Credit Score Scale?
A credit score scale is a list of numbers, sort of like a thermometer. But, instead of it being in degrees, it is in numbers from 850 downward to 300. 850 being the highest number you can achieve and 300 being the lowest. Remember the thermometer. You want your credit score to be as close to the highest number, which is 850.
Credit Score Number: Generally speaking, if your score is between 720 and 850, you have excellent credit. If your credit score is between 620 and 719, you have good credit. A score between 580 and 619, your credit score is considered poor. Anything below 579 is very poor. As your score falls, as in a thermometer, you become lower and lower on the credit score scale.
The Cost of a Mortgage: The reason to keep your credit score number as high as possible is because the higher the number, the less it will cost you in interest when you obtain a mortgage on your home. Your monthly payments can be considerably less, over the life of your mortgage loan, with the lower interest rate. It saves you money.
A lower credit score number will cost you more money. It is lower on the credit score scale. Your interest rate will be higher and so will your monthly mortgage payments. The location of your credit score number on the credit score scale will affect all purchases that require a loan.
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