If you need a mortgage, a good credit score, also called a FICO score, is essential—and it’s within your control.
In a nutshell, a credit score is a simplified calculation of your history of paying back debts and making regular payments on loans. If you’re borrowing money to buy a home, lenders want to know you’ll pay Here’s your crash course on this all-important little number, and how to whip it into the best home-buying shape possible.There are three major U.S. credit bureaus , and each releases its own credit scores and reports .
“Having $1,000 of credit card debt is bad if you have a limit of $1,500. It isn’t nearly as bad if your limit is $5,000,” Forrest says. The simple math: Although you owe the same amount, you’re using a much smaller percentage of your available credit, which shines well on your borrowing practices.Ask your credit card companies to increase your credit limit, which improves your debt-to-credit ratio that compares how much you owe to how much you can borrow.