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Financing a Home



Closing on a Home


Credit scores for mortgages

Your credit score plays a major role in determining the rate that you’ll be able to get on your mortgage. Before you apply for your mortgage, make sure your credit reports are accurate and up to date. We’ll show you how your credit report is used and highlight some strategies that may help you raise your scores.

 

Determine your credit scoreBy law, you are allowed to check your credit report for free once per year.

Before you start shopping for a home, you should check your credit score by getting a copy of your credit report. 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

 

What your credit report contains

 
Credit score bar chart: 500 and below – Very Poor. 501-620 – Poor. 621-680 – Fair. 681-720 – Good. 720 and above – Excellent.

Your credit score
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.

 

How your credit score is calculated

To determine your credit score (also called a FICO® score), credit bureaus evaluate your history based on these factors:

 

How to improve your credit score

Unfortunately, there’s no quick fix to improve your credit score. But if you work at it steadily, you can improve your score over time. Here are a few ways to help raise your credit score before you apply for a mortgage:

 
  • Avoid other big purchases until you close on your house


You can find more information about how to improve your credit and maintain good credit on sites like myfico.com and creditreport.com.

 

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 do not automatically disqualify you from getting a mortgage. Many people may find themselves in difficult financial situations due to illness, divorce, temporary unemployment, or other extenuating 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 Chase Mortgage Banker openly and honestly about your situation. They will work with you to evaluate your current credit profile and determine what mortgage options best suit your particular needs.