Does My Credit Score Really Matter?

Wednesday, November 3, 2010

Just like size, yes and no. No if you are independently wealthy and can afford to pay cash for everything including homes and cars. Yes if you are like 99.99% of the population and depend on credit to make such purchases.

Prior to the recession banks were willing to provide loans to the subprime market with no money down. This means you could have a credit score in the lower 600 range and still purchase a home without a down payment. Often times you had to pay a higher interest rate, but you were able to get the loan. Today is a much different story. Many people with a credit score hovering around 700 have to come up with a 5 to- 20% down payment, have minimal debt and jump through a few hoops just to get a loan. So far this year there have been 1.9 foreclosures in the United States. This number continues to grow and some states such as Nevada have 1 in every 84 homes being foreclosed.   There is a lot of speculation as to what the next few years will bring with banks loaning money. If they chose not to loan any money we will fall in to a deeper recession. If they further tighten the rules of lending many people will be eliminated from the possibility. The speculation is there will be some sort of middle ground. It is possible that foreclosures and bankruptcies will not have quite as much impact as they once did on your credit score. It is all unknown at this point, but there are possibilities.  The reality is we all need to be aware of our credit scores and do what we can to either maintain our good credit rating or improve a less than stellar credit score.   Keep in  mind anything less than 680 is questionable with lenders, whereas a few years ago you could get a home loan with a score of 640. If you have a score above 700 you are in good standing.