Posts Tagged ‘credit report’

Before 2008, a good credit score range encompassed scores between 650 and 800. Average credit encompassed scores between 550 and 650, while bad credit was any score under 550. However, after The Great Recession took place, lenders began changing their perception. Now even a 700 score is considered too low. In fact, if you peruse Facebook pages or message boards related to finance, you will see many horror stories of people with 700 to 800 credit scores getting turned down for loans.

With that said, consumers must look past the numbers. Yes, if possible, they should try to get in the 700s, as that has become the new 650. However, they should also start saving, in the event they have to put 20 percent down on their mortgage. With a 700 credit score and tens of thousands in the bank, consumers WILL get approved. They may not be able to take advantage of the no-money-down loans that were so popular in the past, but they will be able to get an affordable fixed-rate mortgage.

Consumers with bad or average credit can also get approved with 20 percent, but they will probably be given an adjustable rate mortgage. Adjustable rate mortgages fluctuate, which makes things difficult for buyers. A mortgage of 1,000 one month could jump to 1,200 in six months just because the interest rate changed.

In summary, being in a good credit score range does matter, even if the playing field has changed. So if your credit is not in the 700s, you need to work on getting your finances together. Use the Annual Credit Report network to get a free credit report online. Take note of any irregularities and contact the credit reporting bureaus to get them fixed. Afterward, work on paying down your debt. Even if you cannot pay it off completely, if you can lower your debt-to-income ratio, you can still increase your score significantly.