Whether you are in the market to buy now or you are saving to buy later, it is important to know how credit works on your behalf or against you. Why? One word...INTEREST.

This is the stuff they don't teach us in school. So let's talk about the basics. Interest is the money you pay to borrow money. Ideally, you want the lowest rate possible.

Lenders judge your risk level by your credit score. 800 credit score means you are low risk. A 500-600 credit score most likely indicates you have not always made repayments on time and they classify you as higher risk. Thereby charging you a higher interest rate to borrow.

What makes up your credit score?
👉Payment History- 35% of your score. Indicates if you have paid as agreed and if you pay on time.
👉Amount Owed - 30% of your score. This is the amount you have borrowed. Indicates how much you owe today. You will want to make sure you have plenty of credit available.
👉Length of Credit History- 15% of your score. You can't do much about this one. It has to do with the age of your credit. Longer open and available cr dit is a good thing.
👉New Credit- 10% of your score. This is the credit you have most recently opened. If you are planning to buy a house, do not open new credit as it will increase you debt to income and lower your available credit.
👉 Mix of Credit- 10% of your score.  What types of credit do you have open? Revolving lines of credit? School loans? Car loans?

Get Knowledgeable about your credit. Federal law says you are able to get one free credit report a year from each agency. Go to annualcreditreport.com. Gain awareness and fix any issues as soon as possible.

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Interested in more tips, tricks, and strategies? Download a copy of my informative buyer's guide to help walk you through your home-buying process.  You can also visit my YouTube Channel for a series of videos about how to go about buying your next home.