Know Your Credit Report

By
Real Estate Agent with Atlantic Bay | Sotheby's International Realty

Knowledge is power when it comes to knowing your credit scores.  If you are contemplating a purchase, it's a great idea to know your full credit picture before you apply for a mortgage.  By planning ahead, you can be proactive about positioning yourself to get the best interest rates.

Borrowers with the highest FICO scores (760-850) can expect to be offered lower interest rates and more loan choices.  On the other end of the spectrum, a FICO score of 500-520 is usually the minimum required to even apply for a mortgage.

Several months prior to applying for a mortgage, we recommend obtaining a copy of your FICO score through www.myfico.com. Also, in accordance with the Fair and Accurate Credit Transactions Act (FACT Act), you are entitled to one free copy per year of your report from each of the three credit bureaus (Equifax, Experian and TransUnion). Find out more by going to www.annualcreditreport.com.

There may be errors on your credit report pertaining a missed payment or pertaining to your history that could take a few months to clear up.  You can also work to improve your credit score by paying off outstanding balances.  One bit of advice: don't close out any of those credit card accounts once you have paid them off.  In some cases, this can hurt your credit score. 

By taking the initiative to improve and maximize your credit profile well ahead of time, you can move forward with confidence once you find your dream home.  AND, you stand to save a significant amount of money over the term of your loan by qualifying for the lower interest rate.

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