Credit scores and Loans
All you need to know
about credit scores
Not knowing your
credit score can cost you!
Know your
credit score and how to improve it!
Your good credit history is more important than ever before. Solid credit lowers the cost of financing your home and it can be the deciding factor in whether your home loan application is approved.
In today's "business at the speed of thought" high-tech age, your credit history will be reviewed more frequently by artificial intelligence than human intelligence. This computerization has made the loan process more efficient. However, computers take all the subjectivity away from credit evaluation. You have to accept responsibility for your own credit rating to be sure you are not shortchanged by any blemish on your credit rating.
It is important that everyone know their credit score. Each year you are allowed one free credit report. There are three credit bureaus that can show your credit report to you:
Sometimes incorrect information appears on a credit report. It can take a few months to correct and it may mean the difference between being able to buy your dream home or not!
The typical range of credit scores is between a low of 400 to a high of 900. Sometimes a score cannot be obtained due to lack of credit history or too few lines of credit.
What do those scores mean to creditors?
720 plus Fabulous, you are at the top! Best rate and terms.
700-719 Excellent score. You are a very desirable borrower.
680-699 Good credit. You should be in strong shape to buy.
660-679 Okay credit. Don't look for other exceptions.
640-659 Borderline credit. Okay if everything else is strong.
620-639 Weak. The rest of your file must be perfect.
600-619 Difficult. Needs some work or a special program.
Below 600 Trouble. Need to improve your credit.
Borrowers having a score over 700 typically can be granted exceptions for other problem areas like new employment or frequent changes in employment.
To improve your credit, an easy way to begin is by increasing your credit limits (and not using the increased line of credit), paying off your credit so you have more available credit. When the ratio between the amount of credit you owe and your maximum credit limit increases, it is viewed as a plus in your scoring.
Avoid frequent inquiries into your credit history. This can trim your score a few points. This negative effect of multiple inquires only lasts about 30 days.
For additional information and education you may find these links helpful.
What is a FICO score(credit score)?
Is your credit score keeping you from getting the best mortgage rate and terms?
Educate yourself here so you do not miss out on the best mortgage rate and terms for your next home purchase.