Finding the home you want in Rhode Island isn’t necessarily easy. For many people, one of the biggest roadblocks to buying the home they want is their credit score. Banks use a person’s credit score as one of the determining factors in whether or not to grant a mortgage at agreeable rates. Overall, you should know what a good credit score is to buy a home in Rhode Island before you even begin looking at houses.
What goes into calculating a credit score?
The first thing you should learn regarding a credit score is exactly what goes into calculating it. Credit scores are calculated from data collected by the three major credit reporting agencies. These agencies are Experian, Equifax and TransUnion. The data they collect that will be used to calculate your credit score include:
- History of bill payments (especially if they were on time or not)
- The amount you owe to lenders
- The duration of your credit history (longer is considered better)
- The mixture of the different types of credit you use (more diversity of credit and loan types is better)
- Your number of credit inquiries (more is considered risky)
- The existence of bankruptcies, foreclosures or debt collections in your credit history
What is a good credit score for obtaining a mortgage?
Credit scores come in three numbers and range from 300 on the low end to 850 on the high end. In regards to credit scores, higher numbers are better. 850 is the best credit score possible and represents excellent credit. However, anything above 670 is still considered to be good credit. If you want to obtain a mortgage on a piece of real estate in Rhode Island, you should have a score of 620 or higher.
How do you raise your credit score?
Once you understand the data used to produce your credit score, you can change your behavior. First, the borrowing behavior that produced the bad score should be improved. In regards to credit cards, a low balance should always be maintained. Bills should always be paid on time. There could also be errors in your credit history and credit report. If so, they should be fixed with each credit bureau.
Overall, rebuilding your credit so you improve your credit score will take some time to do. However, if you can correct your spending and borrowing habits, improving your score is a real possibility. If you do so, you should be better able to afford a mortgage on a house in Rhode Island.