CreditWise vs. Credit Karma: Which One is Better?

• What is the minimum credit score to buy a house?
• Which credit score matters the most when buying a house?
• How does my credit score increase?
• How does my credit score decrease?
• How Do I Check My Credit Score?
• CreditWise or Credit Karma?
• What is the fastest way to raise your credit score for a mortgage?

Why Does Credit Score Matter when Buying a House?

Your credit score is a reflection of how well you’ve handled debt in the past. It takes into account your payment history, debts owed, new credit, length of credit history, and type of credit used. 

Having a good credit score makes the house buying process smoother and more affordable. There’s a minimum credit score requirement depending on the loan, and a higher score gives you more flexibility in choosing the right loan for you. Likewise, a higher credit score means you’ll qualify for a lower mortgage interest rate.

What is the minimum credit score to buy a house?

A minimum credit score range of 620-640 is the general rule of thumb for securing a mortgage loan. Some financial institutions as well as FHA or VA loans allow for credit scores as low as 580.

It’s also important to note that 90% of the top lenders use the FICO scoring model. A FICO score tells lenders how likely you are to repay borrowed money based on your credit history. This is where lenders get the minimum 620 credit score from.

Read More: How to Buy a House With Bad Credit

Which credit score matters the most when buying a house?

The credit score that matters most when buying a house is whichever one the lender looks at to make the underwriting decision. Generally, the middle score is the most significant, and lenders will ignore the highest and lowest numbers provided by each of the popular credit monitoring services, including Equifax, Experian, and TransUnion.

How does my credit score increase?

Increasing your credit score can take time, especially if you have a bad credit history. Thankfully, most negative items will disappear from your credit history over time, although some can take as long as 7 years to go away. 

There are several ways to improve your credit score, including:

• Pay all your bills on time – This communicates to lenders that you are dependable. Consider setting up automated payments if you struggle to remember payment deadlines.
  
• Pay down the card that’s close to its limit first – Your credit score is impacted by your debt-to-credit ratio. It’s good to keep balances low on credit cards and revolving credit.
  
• Make frequent payments – Pay down your card twice a month. The more on-time payments and longer your credit history, the better.
  
• Keep credit cards open – Don’t close old accounts even if you don’t use them. This way you’ll benefit from longer average credit history and a larger amount of available credit. A long credit history indicates to lenders that you have experience handling credit. You should also avoid adding additional consumer credit.
  
• Check your credit score often – Keep track of your credit history so you’re not surprised by sudden changes.

Read More: Rent to Own Credit Repair: What it Means for Your Home-Buying Goals

How does my credit score decrease?

While knowing the tips and tricks for improving your credit is important, you also need to know what can hurt your credit score. 

Avoid these credit score pitfalls as much as you can:

• Opening a new credit card – When you do this it lowers your average credit age which can decrease your score by as much as 12 points.
  
• Not making payments on time – Missing and late payments negatively affect your credit score. If you’ve never missed a payment before then the idea of one slip might seem minimal. In reality, a person with a spotless credit history can lose up to 100 points if a payment is more than 30 days past due. 
  
• Mistakes and identity theft – If you ever see a drop in your credit and can’t pinpoint a concrete reason, make sure to reach out to the credit bureaus to avoid any errors or identity theft.
  
• Receiving a derogatory mark on your credit score – Derogatory marks indicate that you didn’t pay a loan in the way you agreed to. For example, if you don’t meet payment deadlines, face bankruptcy or a lawsuit, or have a foreclosure. Due to the nature of derogatory marks, they can stay on your credit history for up to 10 years.

How Do I Check My Credit Score?

When checking your credit score, you want the most accurate indication of where your score presently sits–especially when making as major a decision as buying your new home!

Capital One’s CreditWise allows you to monitor your credit score more frequently and get alerts when there’s a change in your score–without any risk of lowering your score.

CreditWise or Credit Karma?

Is CreditWise an accurate credit score?

Yes, CreditWise uses a VantageScore perspective to deliver accurate credit scores to users.

Does CreditWise hurt your score?

No, a major plus to using CreditWise is that it doesn’t hurt your credit score at all. You can sign in as often as you like to check where your score rests, made possible through the soft inquiry method that CreditWise uses.

How inaccurate is Credit Karma?

It’s not unusual for Credit Karma users to receive inaccurate credit scores, which can be off by as much as 20 to 25 points.

Why is my actual credit score so different from Credit Karma?

Services such as CreditWise pull from all relevant major credit bureaus whereas Credit Karma pulls from fewer, thus resulting in the potential for less precise credit score reporting.

What is the fastest way to raise your credit score for a mortgage?

One of the fastest ways to boost your credit score in preparation for a mortgage is by signing up for a credit-building credit card. One of the top choices is the credit-building credit card from Capital One.

The credit-building credit card from Capital One offers multiple benefits to help you raise your credit score including:

• No annual or hidden fees
  
• You can qualify with limited or bad credit
  
• No foreign transaction fees
  
• Report to three major credit bureaus
  
• $300 credit limit
  
• $0 Fraud Liability so you won’t be responsible for unauthorized charges
  
• You can put down a refundable security deposit starting at $49 to get a $200 initial credit line
  
• Installment payments are available for as low as $20 per payment
  
• Ability to earn back your security deposit as a statement credit when you use your card responsibly (making on-time payments)
  
• Be instantly considered for a higher credit line in as few as 6 months with no additional deposit needed

Sign up for a CreditWise account

Signing up for a CreditWise account is easy, free, and offers great benefits. Century 21 Northwest provides an in-depth look at how to set up your CreditWise account and navigate the tool.

Sign up for a credit-building credit card

Signing up for the credit-building credit card with Capital One increases your credit and optimizes your report where it counts. 

This video offers an overview of the Capital One credit-building credit card and how it works.

CreditWise is a great choice for monitoring your credit score securely. It keeps tabs on your Social Security Number and personal information to alert you of any suspicious activity. You can even use the simulator feature to test how financial decisions will affect your score before you make them!

At Century 21 Northwest, we want you to be informed about the best credit boosting options for your personal finance goals because we’re here to aid you every step of the way in your home buying process.