GET THE INFOGRAPHIC HERE – use this to learn how to check your credit score for free. Once you know your number, you’ll know what score range you fall into and what that means for you.
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McKenzie Goodrich: This is The New Home Buyer’s Guide podcast, brought to you by The New Home Buyer’s Guide, a comprehensive online course that lays out the nine steps to finding and buying your dream home. Get it now at NewHomeBuyersGuide.net.
Jeremy Goodrich: Hey there, home buyers, it’s Jeremy, that guy that bought his first home with no information, nothing done right, but you are not going to be that person. You are going to be better because you’re listening to this podcast. You’re downloading maybe some of the checklists and different resources we’ve created. You’re hiring the right realtors. You’re finding the right lenders. You’re making sure that your down payment is starting to be saved for. On this episode, we’re really going to dig into the other thing you need to do before you start the process of buying a home, and that is addressing your credit score. Your credit score is one of the key players in this process. Really the first thing you need to get right before doing anything else. It’s like building a house. When you build a house, you set the foundation. The thing that everything else sits on, and if you don’t have the foundation right, then the rest of the house obviously is not going to be doing good things when it’s sitting on top of a bad foundation.
The foundation of the home buying process is your credit score. The financial score that is based on your financial behavior over the course of like, I don’t know forever basically, and we’ll dig into it. So, this episode deals with how to find your credit score. I want you to know that in the show notes page, and you can find the show notes page by going to NewHomeBuyersGuide.net-episode6. In the show notes page, we have an infographic that we refer to throughout this conversation, and that infographic is really going to help you find your credit score.
Just to give you a little forward thought, our next episode is going to be how to fix your credit score. So, after you found your credit score, let’s say it’s not very good, or you have a problem. Then there are ways that you can fix your credit score, and the next episode is going to go into that. So this episode is all about how to find your credit score. The next episode is all about how to fix your credit score. When we’re done, hopefully you’ll know that you have an awesome credit score that’s going to make the whole rest of the process that much more smooth, and if you don’t, it’s totally okay. You’ll know how to address it and how to fix it, so that can make the process even better.
All right. Let’s do it.
Credit is a key factor in the home buying process, really the first factor. So whether you’re just thinking about buying a home, and you may not even want to make any moves for the next year or so, this is still something that’s incredibly important for you right now, to understand your consumer credit. That credit score that you get based on your financial behavior in the world and how it can affect your borrowing process, the mortgage process, and ultimately getting the home of your dreams. And it all really starts right here with figuring out what your credit is.
I laid out a couple of infographics. As I mentioned, you can get that infographic at NewHomeBuyersGuide.net/episode6, and it really just shows you two different steps you’re going to need to do. The first one is to get your score. The second one is to understand what that score means. Now, you can go out on the web and get your credit score in all sorts of different ways, but here’s the important thing to understand. Your credit score is based on an annual credit report. We’ll get into the credit report a little bit more when we talk about fixing your credit score, but it’s based on an annual credit report that uses money you borrow, if you’re behind on any payments, any of that kind of stuff. It creates a score for you, a financial score of how you handle your finances.
We can go out and get that by paying money from the three different sources, the Equifax, Experian, and TransUnion. There’s lots of places online where you can pay money or pay a subscription and they’ll tell you your score updated every month even. They send you an email and just tell you what your scores are, so you can really really keep track. And if you want to do that, that’s great, but it costs money, and there is a way to do this. It’s not the perfect way, but there’s a way to do this without paying any money at all.
So, I found two sites, FreeCreditScore.com and then CreditSesame.com. Each of these draws for free one of your three scores. Free Credit Score draws from Experian, and Credit Sesame draws from TransUnion. So, you can go ahead and get those credit scores for free. Now they want you to sign up for their monthly. They’re going to try and sell you stuff in there, and try and sign you up for their newsletter, and all that kind of stuff, but you can work around that. So, let’s start with FreeCreditScore.com. I’m actually going to log into FreeCreditScore.com right now and I’m going to visually go through the process and describe that to you. Obviously this is a podcast, so you won’t be seeing that, but if you do jump into that space and walk through it, you should see basically the same process that I’m going through. So, let’s dig into it.
I’m at FreeCreditScore.com and we’re going to go in here and get your Experian credit report completely free. So, it’s not giving you all three of your credit numbers, but it will give you one of them. You go through the process. Now I’m not going to go through it in detail, but you’re going to put your name in, your last name, your email address. I would suggest un-clicking send me all this credit information. This is just trying to sign you up for special offers and things of that nature. So, un-click that. Put your current street address, all that kind of information asking why you’re checking your credit, and submit and continue. After this screen, they’re going to ask you your social security number. They’re going to ask you some other identifying pieces of information.
That’s going to ultimately get you to a screen that pops up a number. It’ll give you that number, the single Experian, in this case, credit score, and while it isn’t perfect, it isn’t all three of your credit scores which combine to make your whole credit outlook, one score is going to give you really a pretty decent sense of what your credit situation is. So, going to FreeCreditScore.com and filling out your information, getting that one Experian credit score is step one.
The CreditSesame.com, again basically the same process you’re going to go through here. They’re going to want your email address, some of your information. You’re going to create a little password. If you have check boxes to not get their newsletter, go ahead and do that. While they’re trying to sell you something on the back end, they will give you a free credit score without having to buy anything at all. With Credit Sesame, it’s the TransUnion credit score. So by getting both of those, you’re going to have a sense of what your credit score is.
What does that mean? Well, you know what you can do is look at the bottom of the infographic at NewHomeBuyersGuide.net/episode6, and I created a little layout. Again, it’s very basic information, but something to get you started about exactly what your credit score means associated with getting a mortgage. Again, what’s our goal here? Our goal is to get pre-approved for a mortgage that ultimately will help us to purchase a home. If we’re not pre-approved for a mortgage, we cannot purchase a home, and unless you’ve got hundreds of thousands of dollars sitting around, you’ve got to get the mortgage. And to get the mortgage, your credit score is going to be involved. So, let’s look at the options.
We’ve got a 740 or above. In general, if you have a higher than a 740 credit score, you’re going to get the best mortgage options at the best interest rates. If you’re 740 or above, hooray. You are in good shape. You’ve got great credit and you’re ready to get pre-approved for a mortgage.
If you’re 640 to 739, this isn’t terrible. That’s okay. A lot of people are there. What that means basically is that if you go to apply for a mortgage right now, you may not get the best rates out there. Mortgages, different kinds of mortgage products or different kinds of loans use your credit to decide whether you qualify for those loans. If you have under 740, you may not qualify for some of the best ones. But at 640 to 739, you’re still going to qualify for solid standard loans with decent interest rates. Again, you’ll need to talk to mortgage lenders to find out more details about that, but you should be okay. You know, at 640 to 739, if you’re not in a rush, you still may want to try and fix your credit, and you certainly want to at least listen to the next episode of this podcast where we talk about how to fix your credit, because I give you some information over there that could fix your credit really quickly.
If you’re at 710 and you go to fix your credit and you find some things to fix and end up with 750, well that’s awesome. Now you’ve crossed the line of 740 and you’re in the best category. So, 640 to 739, not too much to worry about, but you may not get the best options.
Finally, 639 or below, this is the credit place where, can you get a mortgage? Yeah, you may be able to get a mortgage and you may be able to find the right mortgage for you. It may work out perfectly. There’s plenty of people with lower credit scores who still go out and find mortgages and purchase new homes. So, don’t take away that it’s impossible, but definitely take away from this video that your credit is something to look at, is something to analyze, is something to potentially fix, spend a little time making better, so that you end up in a better financial position when you go to get pre-approved for a loan. So, 639 or below, definitely want to see how you can potentially fix your credit maybe quickly or maybe over the course of six months to a year, and put yourself in a better financial position for when you actually do go out and get pre-approved for a mortgage.
All right, so there it is. Episode six, how to find your credit score. It’s a workaround, the free way. You can certainly pay to find your credit score in ways that maybe are a little bit easier, but certainly aren’t free, so we showed you a free way to do that. In episode seven, we will talk about how to fix your credit. So, if you found your credit is under that 740 mark, it’s definitely a good idea to check out episode seven. Now some action steps. First, head over the Instagram and follow us at New Home Buyers Guide. We put lots of stuff up there, great posts, great information. Just trying to create a community in that space. If you want to go to the posts with the red house on the hill, that’s our logo, and you can share your questions, your comments, give us some love, give us some hate, whatever. Do that in the comments section. We want to hear from you. We want to know what you learned and maybe what you want to learn in the future that we didn’t hit on today.
One more thing, home buying is tricky. The process has clear winners and losers. You know that because I was a loser the first time I bought a home. Home buyers remorse is real. Sometimes you just truly get it wrong. So, you need to know if you’ve got your financial ducks in a row and to understand the timeline that you’re going to go through to anticipate the hidden costs and all the steps along the way. How are you supposed to do that when you’ve never done this before? We totally get it. Well, easy. You’re going to go to the NewHomeBuyersGuide.net. That is NewHomeBuyersGuide.net, and sign up for our e-course. You’ll get walked through the process step-by-step. Think timelines, checklists, videos, expert interviews, and more. It’s like this podcast, but totally beefed up and ready to walk you step-by-step through the process.
Remember, you’re about to make one of the biggest purchases of your life. Do yourself a favor that’ll last maybe the next 30 years and head over to NewHomeBuyersGuide.net. All right. Until the next time, happy home buying.