According to the latest reports brought forth by FICO Inc, there are now more than 43 million Americans who have a credit score which is lower than 599. This accounts to nearly 25% of the US population.
Jarod Wells spoke to a real estate broker and a mortgage lender to know what low scores could mean and also their impact. The talk also helped people understand how they can turn things around to lead better lives.
April Girard, VP of Mortgage Lending at First Community Bank said that it is the last two years of credit history that is most significant. If you have faced bankruptcy, foreclosure or a repossession of a vehicle, the term could vary to as long as seven to ten years too.
Events such as late payments of student or auto loans, late payments to credit cards and mortgage are major factors that contribute to low credit scores. According to Girard, anyone wanting loans at better rates of interest or the cheapest fees cannot afford to accumulate any lates since this impacts them adversely. Those who have already earned low scores should find means to heal it which takes a long time to do.
On the real estate side, broker Gary Broughton clearly indicated that a credit score as low as 599 in the current financial situation would mean that there is almost no chance you will be able to purchase a home.
There are things you can do to turn things around, though. As the very first step, Girard suggests that you work on correcting all the negative debt. If you have accumulated many, then the best thing to do would be to pay the minimum amount for each and work on closing each of the debts one at a time.
As the score gets better, the difference in the monthly mortgage payment would also get better. As one tries to look at the brighter side, we realize that there are a number of consumers in US who have a credit score of 800 and above and the number is only increasing each day. All said and done, all it requires is some amount of discipline and a well defined plan to get things around and make it work to your advantage. The earlier you attempt to repair the negative debts, the greater you have to gain over a period of time.
