Credit Score

Credit Score

Credit Score Tips

When buying a home, mortgage lenders will try and determine your credit risk level by evaluating your credit report. Your credit report will influence what terms that a lender will give you for a mortgage.

Mortgage lenders use a number of other factors to make their credit decisions, such as: your employment history, your debt to income ratio and your credit history.

Understanding how mortgage lenders evaluate your credit risk will help you manage your credit. You can take actions to improve your credit, which over time will raise your score and may mean better mortgage options for you when buying your new home.

A credit score tells mortgage lenders how well you have been managing your bills and finances. A credit report will tell whether you have paid your bills on time, the types of credit you use and how long your accounts have been open.

It's possible that your credit report can contain errors that will affect your score. There could be many reasons for incorrect information and a credit report with derogatory information could cause a mortgage loan for you new home to be declined or have additional fees and a higher interest rate.

You should check your credit report and if you find an error contact the reporting agency. The credit reporting agency must investigate and respond to you within 30 days. If your in the process of applying for a new home loan, report any errors to your mortgage lender immediately.

The credit score mortgage lenders use today for evaluating home loans is called the FICO score. The score was developed by Fair Isaac Corporation and can range from a low score of 300 to a maximum of 850. The higher your score the lower the risk to the mortgage lender. There are three major credit reporting agencies that supply reports to lenders: TransUnion, Equifax, and Experian.

Your credit score is calculated by a mathematical equation that evaluates many types of information from your credit report. Fair Isaac makes the scores as consistent as possible among the three reporting agencies, but the agencies may report the same information in different ways. Even small differences in the information at the three reporting agencies can affect your score.

Improve credit score before applying for a home loan.

Your score can change whenever your credit report changes. Although a late payment, collection, or bankruptcy can quickly lower your score, improving your credit takes time. If your working to improve your credit score to buy a new home, you should check it monthly or at least quarterly. It's okay to request and check your own credit report and FICO score. This doesn't affect your score, as long as you order your credit report directly from the credit reporting agency.

Ways to improve your credit score:

1. Pay your bills on time.

2. Get current on any missed payments.

3. Keep balances low on credit cards.

4. Pay off debt, especially revolving credit (ie. credit cards).

5. Don't open a lot of new accounts. If opening a new account is necessary, pay it on time.

Late payments associated with an account won't disappear from your credit report if you close the account. It isn't necessary to close unused credit card accounts as a way to raise your score. Long established accounts show you have a longer history of managing credit, which is a good thing. In general, a longer credit history will increase your credit score. However, even people who haven't been using credit long may get high scores, depending on how the rest of the credit report looks.

If your applying for a mortgage, you can ask at that time for a copy of your credit report. Mortgage lenders are required to give you a copy of your credit report without charge if they turn you down for a loan.

If you are looking to buy or sell a home in North Texas, please take a moment to fill out the form below and you will be put in contact with a top notch RE/MAX real estate professional who can handle your real estate needs including referring you to a mortgage lender.

Home Buyer / Home Seller Form

Please note that all fields followed by an asterisk must be filled in.

First Name*
First Name*

Last Name*
Last Name*

E-mail Address*
E-mail Address*

Street Address*
Street Address*

Country*
Country*

Home Phone*
Home Phone*

Are you looking to buy or sell a home?

	A Buy
	B Sell

What town would you like to buy or sell a home in?

Price range of home you wish to sell or buy?

Number of Bedrooms of Home you want to sell or buy

Number of Bathrooms of Home you want to sell or buy

Does the home you want to sell or buy have a pool?

If you are buying a home, have you been pre-qualified by a lender?

Please enter the word that you see below.

If you have been considering the purchase of a new home, there are several distinctions between the DFW market and the national averages. Learn more about the DFW housing market at: DFW Housing Facts

Real Estate Guide - Answers to your real estate questions.

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