With a reported 61 percent of Americans spending up to two hours each week looking for their dream home*, we have to wonder: are they also checking to make sure their credit scores can support their homebuying dreams?
Today, we’ll walk you through how to check your credit score, from why it matters, what financial factors drive it up or down and how to stay on top of it all.
Why Your Credit Score Matters
Your credit score is more than just a number. It’s the insight lenders and creditors rely on to make a decision about whether or not to lend you money. Whether you are looking to buy a car or purchase your first home, your credit score (along with your recent credit history) will have a profound impact on the loan or mortgage rates you qualify for and ultimately whether or not you can afford to make the purchase.
Believe it or not, educating yourself on how to check your credit score can be an important step to financially prepare yourself for the future. Luckily, Wyndham Capital Mortgage is here to show you how to check your credit score to see what shape its in.
How to Check Your Credit Score
There are three credit reporting agencies responsible for reporting your financial activity, including:
Monitoring these three agencies has become more accessible in recent years, giving consumers the opportunity to track their credit score and credit history on a monthly basis. Some people use online credit monitoring sites to keep tabs on their credit score and view trends in their credit history. Many credit cards provide their customers with a FICO score estimate as well, helping to keep consumers “in the know” with their finances.
For how to check your credit score regularly, you can visit each credit reporting agency’s website, or use a credit monitoring software that will automatically update you of changes in your score. Sometimes, credit monitoring software includes additional charges, so it is important to keep that in mind as well.
Credit scores can vary from one service to another based on how each credit bureau calculates its scores. Since these services typically perform what’s known as a “soft pull” on your credit, your credit score is not negatively affected by these recurring updates provided on a monthly or regular basis.
Understanding Your Credit Score
Your credit score consists of several financial factors (broken down into percentages) to make up a specific three-digit number. While 60 percent of Americans know what is a good credit score*, how many know the factors responsible for such an important number?
Here are the financial factors according to FICO that make up your credit score:
- Payment History (35 percent)- Includes the frequency of payments and whether they were made on time, late or missed.
- Amounts Owed (30 percent)- How much debt you carry in total as well as your credit utilization.
- Credit History (15 percent)- This refers to credit card and account age. Hint: having a longer credit history is a good thing!
- New Credit (10 percent)- New credit inquiries made by lenders or creditors to finance a purchase like a car, mortgage or personal loan. New credit inquiries can require a “hard pull” which can negatively impact your score.
- Credit Mix (10 percent)- The mix of accounts you are responsible for, including mortgage, auto, student and personal loans, credit cards, etc.
Why You Should Also Check Your Credit Report
Taking advantage of your annual credit report is a good tactic for monitoring your credit portfolio. Here’s why:
Your credit report houses all of the financial factors driving your credit score and is one factor that lenders use to determine your creditworthiness. Regardless of how lenders or creditors calculate these factors, the fact remains that all of your reported financial history can be found on your credit report, including possible fraudulent accounts, foreclosures, bankruptcies, civil suits, companies that have accessed your credit report and more.
Viewing your annual credit report is your opportunity to perform “checks and balances” on your personal finances and make sure no fraudulent activity is affecting your credit.
From must-have information on how to check your credit score to the helpful tools and mortgage calculators designed to give you a realistic idea of what you can afford, Wyndham Capital is on a mission to make your home loan journey smooth sailing.
*Wyndham Capital Mortgage Data Source: WCM’s Mortgage 101 online survey was given to 2,342 adults in the United States. The margin of error fell within +/- 2 percentage points with a confidence interval of 95 percent. The fieldwork took place between March 23rd and March 29th, 2021. This survey was commissioned and conducted by an independent creative market research agency.