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Understanding and Improving Your Credit Score with O1ne Mortgage

At O1ne Mortgage, we understand the importance of a good credit score in securing favorable mortgage terms. Whether you’re looking to buy a new home or refinance your current mortgage, having a strong credit score can make a significant difference. Call us at 213-732-3074 for any mortgage-related needs.

What’s the Best Credit Score?

While a perfect credit score of 850 on the FICO® Score scale is impressive, it isn’t necessary to qualify for the best credit terms. Scores of 800 or better are often considered as good as perfect by many lenders. Your goal should be to achieve a score high enough to secure the credit you need with favorable terms and low interest rates.

Why a Good Credit Score Is Important

A good credit score (670 to 739) can open doors to a wider range of credit offers and bring numerous benefits, including:

• Lower interest rates on credit cards and loans
• Better borrowing terms
• Lower insurance rates
• Access to better credit card rewards programs
• Greater options for renting houses or apartments
• Lower security deposits on housing and leased equipment

Credit Scores Needed for Different Types of Credit

Here’s an overview of the minimum credit scores required for various forms of consumer credit:

Mortgages

For conventional mortgages, a minimum FICO® Score of 620 is typically required. FHA loans may be available with a score as low as 500, depending on the down payment.

Auto Loans

Auto loans are available to borrowers with scores ranging from poor (579 or lower) to exceptional (800 or greater). Higher scores generally result in better interest rates and terms.

Personal Loans

Unsecured personal loans usually require a good FICO® Score (670 to 739) or better to qualify for favorable interest rates.

Credit Cards

While you may qualify for a credit card with a score as low as 600, better scores provide access to more options and rewards.

How to Maintain Good Credit

Maintaining good credit involves understanding the factors that influence your score and adopting sound financial habits:

• Pay your bills on time: Payment history is the most significant factor, accounting for 35% of your FICO® Score.
• Keep credit balances low: Aim to keep your credit utilization ratio below 30%.
• Cultivate a variety of credit accounts: A diverse credit portfolio can positively impact your score.
• Take on new credit only as needed: Avoid opening too many new accounts or having too many hard inquiries.
• Be patient: The length of your credit history accounts for 15% of your FICO® Score.

The Bottom Line

If your credit score allows you to access the type of loan or credit you need at an affordable interest rate and terms, it is high enough for your current needs. By managing your credit responsibly, you can improve your scores over time and gain access to even better lending options. For personalized mortgage advice, call O1ne Mortgage at 213-732-3074.

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