Credit Scoring vs. Mortgage Rates
Many lenders are tightening guidelines making it more difficult to qualify for some mortgage programs. It's a good idea to know you credit score. Low scores cost you money in higher interest rates & lost opportunities.
There are three credit reporting agencies independently tracking your credit history. TransUnion, Equifax & Experian. Use of credit is graded according to statistical modeling done by the Fair Isaac Corporation (FICO). Lenders use FICO scores to predict your likelihood for making future loan payments. Mortgage lenders combine all three scores into one report (trimerge) & use the midscore for mortgage lending decisions. Credit scores are labeled like school grades with "A" being highest. Higher FICO midscores receive better grades with more loan options likely available.
The following chart has some generalizations about how credit is graded.
[Sub-prime] [Alt-A] [ - A - ]
400 500 620 680 850
^----------^------------^----------^-------------^
It's a steep slope. Fall below A credit and rates are likely to increase, loan options diminish & higher minimum down payments may be required.
Many of the consumer credit reporting agencies you see advertising are owned by one of the three credit reporting companies. Each FICO score is 1/3 of the pie used for mortgage lending decisions. I'm happy to provide a free copy of your trimerge credit report.
Use the link below to see how much your fico score can change your mortgage payments.
http://www.myfico.com/CreditEducation
Greg Zaccagni - Mortgage Specialist @ www.MortgageAdvisor.info
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