Finding a Home
Financing a Home
Closing on a Home
Why your credit score matters
Your credit score plays a major role in determining how much a bank will lend you and the interest rate that you’ll be able to get on your mortgage. Make sure your credit reports are accurate and up to date before you apply for a mortgage.
Here’s how to determine your credit scoreBy law, you’re allowed to check your credit report for free once per year.
Your credit report will be created by one of the major credit reporting agencies:
Equifax: 1-800-685-1111 │ Experian: 1-888-397-3742 │ TransUnion: 1-800-888-4213
Your credit score can range from 300 to 850. Most scores fall between 600 and 700. Lenders put a lot of emphasis on your credit score, because it helps them determine how likely you are to pay back your mortgage.
If you have a good credit rating, it can help you get better mortgage options and lower mortgage interest rates. Alternatively, a low credit score may lead to a higher interest rate on your mortgage to make up for the increased risk.
Your credit report will not include information about your ethnicity, salary history, religion, checking or savings accounts, stocks and bonds, medical history or personal assets.
Here are a few ways you can improve your credit score
There are no quick fixes to improve your credit score. But if you work at it steadily, you can improve your score over time by consistently paying your bills on time, making payments for the minimum amount due and reducing your debt.
Credit history: One part of the big picture
When you order your credit report, keep in mind that your lender has a sense of proportion. Many people, at one time or another, have had trouble making a payment on time. Late payments don’t automatically disqualify you from getting a mortgage. Many people may find themselves in difficult financial situations because of illness, divorce, temporary unemployment or other circumstances.
Although your credit history is important, it’s still just one factor in the decision to approve your mortgage. If you can demonstrate that your credit problem is in the past and you’ve been able to re-establish a good track record, speak to your Mortgage Banker openly and honestly about your situation. They’ll work with you to evaluate your current credit profile and determine what mortgage options are best for you.
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