How Your Credit Score Affects Your Ability to Buy The Home You Want

Many of the questions we are commonly asked in today's real estate and mortgage environment are regarding credit scores.

When you talk with an experienced Loan Officer, be sure to ask them for recommended resources to help you improve your chances of affording the home you want.

How Your Credit Score Affects Your Ability to Buy The Home You Want:

Many people are not quite sure how their credit scores affect their ability to buy the home they want. In the simplest terms, the better your credit score, the better chance you have of qualifying for the mortgage loan that is ideal for you. This could mean better interest rates, more loan options, and a quicker closing.

Your credit score is also referred to as your “FICO score”. FICO is an abbreviation for the “Fair Issac Company, the developer of the original scoring model. The credit score that FICO gives you in a number between 300-850, with a higher number being a better score. The score is based on many factors, such as past late payments, debt utilization, and the age of your active accounts. However, how the final score is exactly calculated has not been released, as it is a trade secret closed protected by Fair Issac Co.

It is very important that you know and understand your credit score before you start evaluating mortgage loan options for the home you want to buy.

Two Ways to Get Your Credit Scores:

1. Go to www.myfico.com and sign up to obtain your credit score directly from FICO. Be careful that even though you can obtain your score for free you must then cancel your free trial within 10 days to avoid being charged for 3 months of service.

2. Use www.creditkarma.com. CreditKarma is a truly free way to obtain, and monitor, your credit score over time. CreditKarma is supported by advertising partners that advertise credit cards, loan programs, and more so that you can use the website free of charge. Credit Karma also offers you advice on how to improve your credit score by analyzing the different factors that make up you total score (length of credit history, hard credit INQUIRES, late payments, etc.)

You can also get your credit report free, once per year, but with no scores, from the government sponsored website www.AnnualCreditReport.com.

It is important to note that while your credit score is a key component, it is not the only factor that a lender considers when approving a mortgage for the home you have found.

Be sure to contact us by calling 508.528.1800 before you start searching for a home so you already know how to improve your chances of qualifying for the loan that is ideal for the home you want.