All About Credit
What is a credit score?
Savvy home buyers know the importance of credit. When you're in the process of looking for your new home, credit scoring can save a great deal of time and frustration.
Credit scores help determine the type and size mortgage loan for which you qualify. The score is basically a summary of your credit report, in the form of a numerical measurement that reflects your management of credit. Based on information compiled by credit bureaus, the score takes into consideration:
- The applicant's payment history
- The amount of credit the applicant has
- Information reported monthly by creditors
- Any serious past problems with debts (i.e., liens, bankruptcies, collections, judgments)
The credit scoring process converts these and other factors into a single number that aids in determining the likelihood an applicant will repay a loan on a timely basis.
Credit scores used in mortgage lending typically fall in the 300 to 900 range. Generally, the higher the score, the less risk of default the borrower presents to the lender. However, credit scoring is only one factor considered by a lender when evaluating and only after careful analysis of all the information collected from the applicant.
Even home buyers who are already pre-qualified benefit from knowing their scores. While the pre-qualification measures debt and income ratios to "predict" the loan amount for which a person may qualify, the credit score provides a clear indication of the buyer's credit standing - a major factor during the final loan approval process.
A low score may necessitate a decreased loan amount, a change in mortgage type or possibly even denial of the loan altogether. We recommend that every home buying prospect learn his/her credit score as the first step in the lending process.
How can I get started?
Simply call us toll free at (877) 356-8887 or take two minutes and click here to fill out a short form online , your personal loan officer will contact you to help you get started
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First Equity's expert Loan Officers can explain what your credit score means to you.