What determines your interest rate on a home loan? Your credit score! When you apply for a loan, the lender runs your credit report and receives your payment history summarized as a number, called a FICO score.
Each of the 3 major credit bureaus rate you according to your FICO score, between 300 to 850. The higher your FICO score, the better your loan terms (such as lower interest rate).
The FICO score is comprised of:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Type of credit in use (10%)
Your credit score depends on many factors, such as: number of credit accounts, dollar amounts of debts, total amount of debt, record of on-time payments, credit inquiries, account charge-offs, and public records such as judgments and bankruptcies.
Before you apply for credit, you should review a copy of your credit report from each of the three major bureaus to avoid any surprises. To find out your credit score, go online to www.ConsumerInfo.com. The 3 Bureau Online Credit Report and Credit Score costs $34.95.
If you are not satisfied with your credit score, contact Carlton Brown at (805) 550-7055. He can enroll you in ELG Credit Repair Services. ELG is a service which works with the credit bureaus to improve your credit report by correcting erroneous, obsolete, and inaccurate information.
90% of consumers have at least 1 error on their credit report. Don’t get penalized by credit report errors…get the good credit you deserve.
If you need assistance with debt consolidation and budgeting, contact Consumer Credit Counseling at 1-877-901-2227 or www.gotdebt.org. This non-profit can help you get on track.
In summary, your credit score is your “report card” which affects your ability to borrow money, to receive credit cards, and even to get a job. Keep it in good standing and monitor it carefully!
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