are based on different criteria, weighted differently, so the three major credit bureaus in the U.S. (Equifax, TransUnion, and Experian) may produce different scores for an individual, even though the scores are based on the same credit report information. Your current credit score is a huge issue in determining if now is a good time to house shop. Having a good credit score before you take on a mortgage is an important factor. A SHORT GUIDE TO CREDIT HEALTH We are increasingly dependent on credit; therefore, it is necessary that you have a good understanding of personal credit reports and your credit score before beginning the process of buying a home. When you apply for credit (i.e., a mortgage, credit card, or utility service), your credit score is checked. A credit score in the 500s is poor, while one in the 800s is excellent. Depending on your credit score, lenders will determine what risk you pose. Increased credit risk as shown by a low credit scoremeans that a risk factor is added to the price at which money is lent. If you have a poorer credit score, lenders will lend you money at a higher interest rate than one paid by someone with a better credit score. Below a certain score, lenders will not even deal with you. Here is a short guide to help ensure that your credit is in good shape before you jump into the mortgage market. ♥ Monitor and analyze your credit history. With your credit score being such a crucial aspect of the final approval on a mortgage, it is important to have a current idea of how your score is going to affect you. Keep a tab on your score well in advance. This will help you to have an accurate estimate of the rate that you can expect. If your credit score is good, it will help you get approval. Take this opportunity to find out areas where your credit history could use improvement, and take steps to make sure those improvements happen.
18
Powered by FlippingBook