How to manage your credit score.
You know, how you manage your money is very important. If you’re a home buyer, having a good credit score can get you a lower interest rate and save you thousands of dollars in mortgage payments each year.
The Fair Credit Reporting Act allows us to get a free credit report every 12 months from the three reporting companies – Equifax, TransUnion and Experian. These are reports which are used in underwriting mortgage loans. It’s a good idea to get these reports because this way you can monitor your credit scores and check them for accuracy.
Your credit rating is based on your FICO score. That score, in turn, is based on the following: 1/3 on your payment history, 1/3 on the amount of money you owe, and 1/3 on factors such as your amount of new credit and the type of credit in use.
Usually scores fall in the 600s-700s range. The higher your score, the more mortgage options are open to you, and, usually the lower your interest rate. My advice to home buyers is: make sure you order your free credit reports every year, keep current on all your bills, keep your balances low on revolving credit card accounts and connect with your agents’ preferred mortgage lender. That person can help prepare the best loan package for you. Remember, a good report makes borrowing easier! Stay on top of your money! More later, Teri