I was in an office meeting today at Coldwell Banker Gundaker and we were honored by the presence of the venerable Jim Dohr, who’s the President of the company.
Admitally, I showed up halfway through his talk — getting a two year old ready for daycare can be a bear sometimes, folks — but when I did finally sit down, take a deep breath and sip my cup of coffee, I learned something that I considered my main takeaway for the day.
Per Dohr, the average credit score for all Americans is 695. Here’s the real shocker, though: 53% of millennials have a credit score of 670.
In my opinion, here’s the problem: I posted that stat on Facebook and was immediately asked by an old friend whether or not a score of 670 is good or bad. The problem is, I’m guessing that many millennials don’t know what qualifies as good or bad credit. I know that before I bought my first house and certainly before I became a Realtor, I didn’t know much if anything about credit. I just assumed mine was bad, and it turns out I was right.
What I didn’t know at the time, though, was there were many things I could do to increase my credit score.
Had I paid attention earlier and at least gave myself a baseline knowledge of credit and its impact on my life, it would have made the buying process that much easier.
Unfortunately, I was ignorant to the all-impactful impact of the credit score. Don’t let that be the case in your life.
According to experian.com, credit scores, which range from 300-850, typically are considered “good” once they get over 700.
For your FICO score, which is used by many lenders, 670-739 is considered good. Going back to Dohr’s stats above, that means over half of Millenials simply have “good” FICO credit. They’re not yet at the very good stage, which is where you ideally want to be when looking to secure a mortgage. And when it comes to the VantageScore number, over half of Millenials have only “fair” credit. They need to get their scores up into the 700-749 range to qualify for “good”. And again, if you want to buy a house, ideally you want to have very good credit.
Credit impacts just about everything on your loan. From the amount, you’re qualified to receive, to your interest rate.
The takeaway here? Especially if you’re a Millenial and ESPECIALLY if you want to buy a house in the next year or two, start keeping an eye on your credit score.
Educate yourself on credit, the mortgage process, interest rates and the market. You’ll be better off for it as a consumer.