Get the Inside Scoop on Credit Scores and Mortgages

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Credit scores are also referred to as FICO scores. FICO scores are tabulated by the FICO company and the scores that this company produces definitely have an impact on consumers when they want to get mortgages. Lenders utilize FICO scores in order to assess the amount of risk that they’ll take on if they decide to lend you cash for a house or condo.

So, what goes into a FICO score? Well, your payment history (were your payments made in a timely fashion, or were they late?) and the amount of debt that you carry each month are prime factors. A FICO score will range from a bad score of three hundred to a great score of eight hundred and fifty. If your FICO score is seven hundred and forty or higher, you will be considered to have “excellent” credit and this will certainly bode well in terms of your odds of scoring the mortgage that you want!

Learn About the Key USA Credit Bureaus

At present, there are a trio of credit bureaus in America and they are Experian, TransUnion and Equifax. These bureaus are in charge of maintaining credit reports. FICO takes the results from these credit bureaus and then amalgamates them. The result of the amalgamation is three FICO scores. In general, these scores are very much alike. However, sometimes, there are differences between them and these differences relate to the types of information which are gathered by the three bureaus.

How to Determine Your Credit Score

If you pay FICO, the company will give you a credit score for a flat rate. You’ll need to request it from FICO. As well, you will have the capacity to get a single copy of your credit report from each of the three bureaus that we just discussed. You’re entitled to a copy of your credit reports from each of the bureaus once per year. You may access them at the annualcreditreport.com website.

You will be permitted to file a dispute if you think that there is wrong information on your credit reports. For this reason, we do recommend getting credit reports regularly and then going over them with a fine-tooth comb. This is particularly important if you’re planning on applying for a mortgage.

A credit report will contain plenty of information about your credit history. For example, it will include details about any personal loans, student loans and car loans. It’s up to a creditor whether or not late payment information is reported to credit bureaus.

How to Keep a Good FICO Score

Lenders who grant or deny mortgage loans care very much about FICO scores. A bad one is going to hurt your chances of obtaining the home financing that you want. A good one is going to facilitate the process of getting loan approval for a mortgage. With this in mind, how should you keep good credit over the long term? Well, one key tip is to make your bill payments in a timely fashion. It’s common for creditors to report late payments when they are thirty days past the deadline. Some creditors wait ninety days before taking action. In general, providers of healthcare won’t report until payments are much later, if they report the late payments at all.

Another fact to be aware of is that applications for credit cards or loans will be reported. If a lender checks and notices an array of credit applications over a short time frame, it may deter the lender from granting you a mortgage. This is because you will appear to be someone who needs a lot of credit in order to survive. This makes you a higher risk for a loan.

Your credit rating matters. Maintaining a good rating is in your best interests. In terms of obtaining a mortgage, you should take care of boost your FICO score as much as you can before you apply. This will help you to get an affordable loan with the right interest rate, terms and conditions. Mortgages which are backed by the government will have more relaxed requirements for credit ratings. ARM and conventional, fixed-rate mortgages will require higher credit ratings.

If your credit rating is not where it needs to be you can always work with a professional credit repair business who will work alongside you to repair and improve your credit score. It is important to remember that credit repair is not an overnight process and you need to be patient.

Good Credit Ratings Make Life Easier

It’ll be easier to achieve the goal of home ownership when you understand the link between credit scores and mortgages. Hopefully, our guide has helped you to understand what credit ratings are, who compiles them and what lenders who grant or deny mortgages to consumers are looking for in terms of credit scores. Now that you have the facts, you’ll be ready to pay more attention to your own credit rating. If it’s good, keep it that way. If it’s bad, try to fix it. It takes time to repair a poor credit rating, but it’s definitely well worth the effort that it takes.

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