What is a credit score?
Since the 1960’s, lenders have depended on a borrower’s “credit score”, commonly referred to as a “FICO”score, to evaluate the repayment risk associated with a borrower. This credit score is a number between 350 and 850. The higher the score, the better the loan and interest rate for which you will be approved. Your credit score is extremely important because it is used as a guide, not only for obtaining a mortgage loan, but for securing a car loan, cell phone, insurance and even employment. So, the better you can maintain your credit score, the more it will translate into a better interest rate, lower monthly payments and possibly better house, better car, better job and more money left in your pocket.
What determines your credit score? There are five main factors:
- 35% – Payment History – on time payments
- 30% – Outstanding Balance vs. Available credit amount
- 15% – Credit History – length of time credit is established
- 10% – Types of Credit – mortgage, installment, revolving
- 10% – Inquiries from various lending and credit institutions
We will get your credit report and scores. We will review it with you and make recommendations if needed. If you are happy with your credit score, it’s time to move on with the mortgage loan process.
If you are not happy with your score, don’t panic. There are things you can do to improve it. We are here to help. Contact us today to learn more.