How to get a good credit score and what is a good credit score are commonly asked by just about anyone looking for credit to buy a house, or purchase a car through a loan. First of all, to answer the question about what is a good credit score, you need to know why you are asking the question or for what purpose you are asking the question. In general any credit score over 700 is a good to excellent credit score. Anything over 760 is an excellent score and the maximum score you can get is an 850.
For VA loans and FHA loans you won’t need to have your credit scores that high to qualify, but if you plan on going through Fannie Mae or Freddie Mac you’ll need to have your scores better than say 660 to have a chance at getting a mortgage. Don’t count on great rates with lower credit scores for any type of loan program. Again, the one exception to this rule is if you are going with a FHA loan home purchase or refinance or a VA loan. With a VA loan especially, you will most likely have an opportunity to get low streamline VA rates if you try to refinance using their streamline refinance program.
Car loans as well as mortgages will tend to have higher interest rates for lower scores. With this in mind and knowing that you have lower credit scores you may now be asking “how do I get a good credit score?” Below you will find some characteristics of those folks who have higher credit scores. You should be able to identify with any or all of these characteristics which if you can get them in order should do wonders for getting your credit scores up.
Get A Good Credit Score
- Keep the number of credit inquiries on your credit report to a minimum – credit inquiries can lower your scores and they can cause a red flag with someone looking at your credit profile. Be prepared to explain all of your recent credit inquiries if you plan to apply for a mortgage. Your potential lender doesn’t want any credit payment surprises to pop up which could limit your ability to make payments on your mortgage. It is a good idea that if you are going to be looking for a mortgage that you don’t open any new lines of credit within at least 3 months and most favorably at least 6 months before your apply.
- Let your credit report age with you – what we mean by this is that you should keep your credit card accounts open if you can help it. If you can get a card when you turn 18 get one. It is a good idea to get one earlier in life so that your account can age. One factor to higher scores is the age of your credit accounts – especially those accounts that you keep paid on time over the long haul.
- Keep your account open – keeping credit card accounts open once you pay them off is a good idea. One key factor to good credit scores is open lines of credit with little balances one them. If you can keep you balances under 30% of the limit your scores should be really good. Work hard to keep your balances low.
- Get a variety of credit accounts – you’ll want a mix of credit accounts like a car loan, a few credit cards, a student loan etc. A mix of credit will show that you can manage several different types of accounts. As long as you keep your payments, having a good range of accounts your credit scores will be good.
- Keep a clean payment record – in addition to making your payments on time, you’ll want to do what you can to avoid any repossession leading to public judgments like tax liens or collection accounts. These can kill your credit scores and can get in the way of getting approved for a mortgage. For sure if you have credit problems that fall into this category you’ll get higher rates – especially if you are trying to finance a car.
Hopefully with these tips in mind and applying them to your unique credit situation you should be able to raise your credit scores from poor or average to a good credit score.