Different types of credit play a major role in your financial life. Not only is it essential for obvious things like qualifying for a business or student loan or getting a good credit score, but also for less obvious things like getting cell phone service and renting a car. So why is credit important when buying a home?
Three-Digit Number Importance
Your FICO credit score is a three-digit number that measures how likely you are to repay a loan on time. It uses information from your credit report to predict the risk of the likelihood to pay a loan back within 24 months. This score is calculated based on 5 main categories with varying weights, which we covered in our previous blog post.
Credit Report is an Explanation of Your Credit History
Your credit report is an explanation of your account history. It shows when and where you applied for accounts, whom you borrowed money from, and whom you still owe. Your report also tells you if you’ve paid off a debt and if you make monthly payments on time.
A strong credit history, reflected in good scores, will let you qualify for lower interest rates and fees, freeing up additional money to set aside for emergencies, retirement, and other smaller unexpected expenses.
To build credit, it’s important to check your credit cards, personal finances and pay your bills on time to start to show credit worthiness.
How Good Credit Leads To Greater Financial Freedom
Decreasing debt and increasing savings reduces stress and leads to greater financial freedom. These simple keys to financial success are paramount when making the most expensive purchase of your life.
Though for many, building higher credit can seem overwhelming, the good news is that having a good line of credit is not difficult. Here at Millennium Financial Services our team of experts is trained and ready to help you better understand your score and begin making improvements.
We have also created a detailed guide with steps you can take to improve your score in as little as 45 days.
Stop delaying your important life goals and start building today. Contact us now to book your free consultation.