Improve Your Mortgage Eligibility After the housing bubble popped, one of the things people began to focus on was the FICO credit score. As lenders were forced to scrutinize prospective borrowers more closely, the days when your credit score barely mattered to your loan application disappeared. These days , your credit score is critical in many areas of your life: getting a home or car loan, applying for credit cards, get a good rate on your insurance and even getting a new job are all affected by that three-digit number. What is a credit score? A credit score is a number between 300 and 850 that describes creditworthiness, or how likely someone is to repay their debts. Lenders or creditors use this score to decide how safe it is to lend that person the money they need. The score is determined by the three leading credit bureaus, TransUnion, Equifax and Experian. Your creditors report information to them such as your credit limit and whether you pay on time. Each agency keeps its own records so your score can vary from bureau to bureau. For a mortgage loan, generally the middle score is used. Why is it important? The higher your credit score, the better the credit terms you will receive. A high score indicates that you are a low risk for default on your loan. It can also garner you more favorable loan terms. The lower your score, the higher the interest rates you may have to pay. If your score is considered too low, you could be consider at risk of defaulting on your loan, and you may not be able to secure financing at all. How do I track my credit score? Each year, you are eligible to order one free credit report from each of the three credit reporting agencies. You should always order these reports and carefully review them to make sure there are no errors or inaccuracies you were unaware of. Problems and mistakes can be disputed, but it’s not easy and can take a long time. By keeping on top of your reports, you won’t be scrambling to fix an error right when you’re trying to secure a new loan. Can I improve my credit score*? Over time, it is possible to improve a credit score. There is definitely no quick fix, but by paying your bills on time, settling past due accounts, and paying down high balances, you’ll be working toward raising your score. Don’t max out your cards, and if your credit isn’t great, refrain from opening new accounts. Keeping your credit score healthy affects more than your mortgage these days. If you’d like to learn more, I can refer you to local resources that provide credit information. Please contact Brian McGreevy, Broker/Owner, Sarasota Home Realty at 941-544-6763 for more information.
Posted on: Sat, 16 Aug 2014 23:23:37 +0000
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