Credit Scores And How They Affect YOU

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Credit Scores And How They Affect YOU

credit score

What is a Credit Score?

Who decides what your Credit Score is?

How does the score affect YOU with your Home Mortgage?

How do you improve your Credit Score?

Who do You ask for help with your Credit Score if you are wanting to purchase real estate in Bryan College Station?

What is a Credit Score?

Your Credit Score is a number, up to 850 that lenders, insurance companies, banks and employers use to determine your “worthiness”, willingness to pay, past stability and ability to repay a loan. Your Credit Score is one of the most important things in determining whether you are eligible to borrow money to purchase a home as well as your interest rate.  Remember the higher your score, the lower the risk the lender believes they have, therefore the lower your interest rate will probably be. Your Credit Score is also called your FICO score after Fair Isaac & Company.

Who decides what your Credit Score is?

Really the one who determines your Credit Score is YOU.  Now I know you don’t get to write in your own score but what you do affects your score.  Your payment history on the money you borrow is a huge factor in your score. The biggest pieces of your Credit Score are….

  • YOUR payment record – Your payment history is the biggest piece of your credit score. Do you pay your credit cards on time EVERY TIME? Do you pay your car payment on time, EVERY month?  What about your student loans?  Have you ever filed bankruptcy?  Have you gone to the doctor or hospital and then not paid the bill?  All these things can have an effect on your Credit Score.  Lenders want to know you pay your bills on time EVERY TIME.  Yes, it seems like the people who don’t need the money are the ones who can get the loans but banks are not in a charity business. They want to make sure that if they loan you money that they can get it back on time with no hassle.
  • YOUR credit history – Are you just starting with credit? Do you have any credit cards now? FEW want to be the first one to take the risk that you won’t pay them back. But, how do you establish credit if no one will give you the chance?  Start by borrowing a little money from your bank against money you have in savings and PAY IT BACK ON TIME EVERY MONTH!  After a year or so of paying back the money on time you will have established credit. Most home lenders require you to have several examples of you paying back money your borrowed. You can also use the payments each month for your utilities and your phone to help show you are trust worthy – just be sure to pay these each month!
  • YOUR current debt – How much do you currently owe? Do you have credit card debt? Do you have student loans? Do you owe back child support? Do you have a car loan? Have you maxed out your credit cards? How much you owe will affect your score but don’t run out and pay off loans if you are getting ready to purchase a home. Talk with a loan officer who knows about credit BEFORE you use all your available cash paying off loans.
  • YOUR credit applications – Do you apply for credit at the store every time they offer? Have you applied for a new Mastercard or Visa because an application came in the mail? Each time you apply for more credit your credit is “Run” and this can reduce your Credit Score. Remember when you are getting ready to borrow money to purchase a home, you don’t want to look like you are out borrowing money or that you “Need It”.
  • YOUR current credit companies – Which credit card companies have you applied to? Which credit cards do you have? Some affect your scores more than others. Do you only have car loans or ATM cards? Who would ever think that one credit card company is better or worse than another but they are!

How Much Does Your Credit Score Affect You With Your Home Loan?

It affects it a great deal. Of course the rules and guidelines change all the time regarding what lenders require for Credit Scores but in 2010 your credit score needs to be above 620 to be considered for a Fannie Mae (FNMA) loan and 660 to be considered for an FHA loan. These two loan types will give you the best possible interest rate.

Who do You ask for help with your Credit Score if you are wanting to purchase real estate in Bryan College Station?

Of course I suggest that you contact ME!  I will direct you to one of the lenders we work with on a regular basis helping our Clients make sure they get the best possible loan conditions possible. Remember a 1% difference on a loan can make a big difference in your monthly payment.

Susan Hilton College Station Real Estate

Susan Hilton

CENTURY 21 Beal, Inc.

979-764-2100

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