Are you an expert when it comes to your own credit score -- and how you got it?
If you're in the market to buy a new home, it's important that you learn how to see yourself with the eyes of a mortgage lender. That's because the more you know about your credit score, and how to boost it higher, the better off you'll be. You see, a good credit score has its rewards: it can save you thousands of dollars by lowering the interest rates on your mortgage. And a high credit score can even help cut your insurance premiums, too.
First, lets go through the basics - what exactly is a credit score? And why can it work for or against a new homebuyer?
Your credit score is a three-digit number that can be as low as 501 or as high as 990. The "official" name for it is your FICO Score, which is short for Fair Isaac Corp - the creators of the scoring system. Lenders - like mortgage companies - use it to come up with your interest rate. The lower the score, the more you'll pay in interest. Any score above 800 makes you look very creditworthy, which means you'll get the lowest interest rate. Your FICO score opens or closes the door to other things, too: whether or not your credit application is approved, whether or not your credit limit is increased, or how you're treated when you make a late payment.
It doesn't matter what your age is. It doesn't matter how much money you make. When it comes to your FICO score, the only thing that matters is your past use of credit.
Credit agencies like Experian, TransUnion, and Equifax keep track of your credit history. To find out what your credit report says about you, keep in mind that you can order one free copy per year from each agency. Call 1-877-322-8228, or go online to annualcreditreport.com annualcreditreport.com. You could also write to Annual Credit Report Request Service, PO Box 105281, Atlanta, Georgia, 30348-5281. When you get your credit reports, look them over carefully. Report any errors or mistakes immediately If there's accurate-but negative-information on your report, you might want to try to call the creditors and ask if they'll remove it. A creditor might be willing to do this if you have a single late payment in an otherwise perfect record.
If your credit report doesn't make you look so good, don't give up. You can start turning it around by doing the right-and smart-things.
Pay your bills on time. Payment history is the first thing that sends up a red flag to a lender. Any hill over due 30 days or more shows up on your credit report. If a lender sees a pattern of this, your interest rate may be raised.
Reduce your credit card balances.
Maxing out your credit card does not improve your credit score. In fact, the closer you are to your credit limit, the worse your score. Try to keep your balances below 30% of your available credit.
Limit your credit applications.
When you apply for credit, it flags a lender to check your credit report. And you should be aware that too many applications could lower your score.
What if you don't have a credit history at all?
This can sometimes be the case for recent graduates. If this is your situation, it's time to start building a track record. Get a single credit card or gasoline company card before applying for a car loan or mortgage. And try to pay off your balance in full each month.
The more consumers increase their awareness and understanding of the importance and impact of their credit scores, the better and easier buying a new home can be.
So make it a point to take a self-taught course in "Credit Scoring 101." More information can be found on the websites of the three credit reporting agencies. Study it carefully and do everything to improve your own credit score. You won't regret it-especially when you move into your new home and it's time to make that monthly mortgage payment.
Find new homes for sale in the Rio Grande Valley & South Texas online at inewhomesearch.com iNewHomeSearch.com by the area's leading builders featured in the rgvnewhomesguide.com Rio Grande Valley New Homes Guide
No comments:
Post a Comment